Competitive Turkish offers and shakier apparent demand weighed on the European coil markets today.
Turkish hot-rolled coil (HRC) offers to southern Europe of €490-500/t cif had a downward effect on prices. One steelmaker pared its HRC offer from €540/t ex-works to €530/t ex-works. Mills were failing to achieve their €580/t ex-works offers in northern Europe, let alone the €600/t tabled by one well-booked producer.
Expectations of €630-640/t for southern European cold-rolled coil met with the harsh reality of import offers as low as €600/t cif.
In the UK, Turkish offers of £520-530/t have dissipated given weakness in the pound, but one domestic seller reportedly reduced its price to £515/t ddp west Midlands — some distance below previous offers of £530-540/t ddp. The seller in question was also behind on deliveries for third-quarter orders.
Softer pricing and growing uncertainty led to a wait-and-see attitude among buyers that had adequate stocks given tepid demand.
"If we had normal sales activity we would be forced to buy quite soon, the issue is with lower volumes from end-users, we have been able to slow purchasing activity," a large southern European service centre source said.
"I don't need to buy, I can shuffle stock around, [we are] covered well past Christmas if we need to be. Until you get clear direction, you're not going to commit yourself," a UK service centre source said.
A UK seller said buyers were anticipating £50-70/t drops and trying to liquidate stock accordingly, while a trader said people had stocked up ahead of perceived price increases. Most UK service centres appeared to be largely covered for the fourth quarter and in no need to rush. Competition in the outsell market was strong, with some mill-tied distributors selling cut sheet as low as £550/t ddp, meaning a loss compared with replacement material and current stock.
Hot dip galvanised (HDG) appeared to be one of the softer products in Europe, as the automotive slowdown meant some spot tonnage may be freed up. Many European galvanising lines are designed to produce high-grade auto sheet, a market that is still around 50pc served by Chinese mills — Chinese HDG is not covered by the existing import duty on lower-grade material.
So the mills could be competing for smaller tonnages. The UK-based seller said the auto slowdown related more to forecast activity rather than actual present production — both Jaguar Land Rover and BMW are talking about reducing production, while other carmakers are behind on production targets as they grapple with the new testing regime.
"Galv is the item for which we should be most concerned, with the significant volume of material that could be offered into the market due to lower auto demand", the southern European buyer said.
