<article><p class="lead">The UK hot-rolled coil (HRC) market is still abnormally quiet, even for the holiday season, with domestic European mills trying to sell supply in a demand vacuum.</p><p><i>Argus</i>' weekly UK HRC assessment slipped by £2.50/t to £442.50/t ddp today.</p><p>The previous expectation that prices will increase in the fourth quarter has gone, with mills already indicating they will roll over third quarter prices for October deliveries. But reticent buyers are now suggesting this might not be competitive enough given the erosion in their margins and tepid end-demand.</p><p>Service centres are starting to struggle, particularly those with higher stocks. Issues at one general steel stockholder are contributing to reduced appetite from credit insurers, which could be a problem going forward. </p><p>One steelmaker reported outsell prices from service centres to end-users as low as £465-469/t ddp West Midlands for speed-stock sheet, but others maintained prices were closer to £475/t plus.</p><p>Given stretched finances, some decoilers were trying to delay deliveries, with some mills even contemplating offering free storage as a result. Invoice discounting could increase as companies try to free up working capital, but the gradual ebbing of prices means inventory is depreciating. </p><p>One northern European hot-rolled coil mill was considering offering base grade DD11 at around £430/t ddp West Midlands this week, down by around £10/t from third quarter pricing. The same company was expected to change its pricing policy from €485-490/t ex-works to €470/t ex-works after a recent sales meeting, because of low demand.</p><p>A domestic narrow coil producer was reportedly aggressive in the marketplace. Traders still cannot compete so were not really offering. Prices were approaching £500/t ddp from most third-country mills, not helped by the plunge in the value of sterling as financial markets priced in a no-deal Brexit.</p><p>One trader offered Vietnamese cold-rolled coil at £520/t ddp in recent weeks but no buyers were interested. Imports of HRC are deemed around £30-40/t too expensive compared with domestic production. </p><p>Demand is so low that the idea of the UK leaving the EU without a deal is not leading to any stockpiling. Ahead of the March deadline, end-users and some service centres amassed inventory to ensure continuity should there be a no-deal outcome. Some service centres are even looking to destock in anticipation of replacement costs softening. </p><p>The structural issues afflicting the global automotive market remain an issue, with concern in the UK magnified by Brexit. Car output in the UK sank by 20pc in the first half of this year, with the fall in June meaning 13 consecutive months of decline. Brexit-fuelled shutdowns contributed to this reduction. </p></article>
