EU HRC: Northwest firms again, sheet starts to follow

The northwest European hot-rolled coil market continued to firm today, with some service centres willing to pay more given slightly rising sheet prices.

Some service centres have been able to pass off €15-20/t increases in sheet prices since the festive season, despite pockets of cheaper selling in southern Germany, allowing them to raise their bids for replacement coil.

Others have now stopped selling below replacement cost and are trying to pass off rises to stop margins further eroding.

The Argus daily northwest Europe HRC index rose to €454.25/t ex-works, taking the monthly average to €442.50/t.

One service centre said it was concluding business at around €450/t base delivered for DD11 from some producers, primarily in central and eastern Europe. Larger mills were closer to €485-500/t delivered from the north, while one eastern European mill was €480/t delivered.

Some questioned the likelihood of a Russian mill selling at €455/t free on truck, suggesting its price was closer to €475/t cfr and that it was largely out of the market.

Argus' domestic Italian index nudged up by €2.25 to €442/t ex-works today. Despite the recent uptick in Italian pricing, import values are becoming more competitive, as Turkish mills lower prices to attract more interest. Offers were heard today at $510/t fob and below, with a booking heard concluded last week at $505/t fob into Italy. Bookings into Spain have been heard below this level, for decent tonnages.

The gap between import prices and local levels still stands at around €30/t, according to Argus assessments, suggesting there is more room for movement by Italian or Turkish mills.

Lead times out of Turkey have slightly lengthened, while Italian producers are selling with the usual availability of around a month. But Turkish domestic prices and scrap have both been showing signs of weakness in the past week, and with the approach of the lunar new year in China, sentiment may dampen further globally. Argus' fob China HRC index nudged up another $1/t today, however, to $501/t fob, as a couple of mills and traders increased offers in expectation of firmer demand post-lunar new year.