EU coil market poised as demand worries emerge

The European coil market appeared delicately poised this week, with mills still bullish citing strong order books, but buyers concerned about underlying demand.

Some car production has been delayed from the fourth quarter into next year as companies grapple with the new, more rigorous, testing regime. Mills have so far not reported reduced steel demand as a result, but it is concerning buyers.

One large service centre was well booked in volume terms and not looking to add additional supply as it was growing more concerned about demand.

Offers are €580-€600/t in northwest Europe, but buy-side sources suggest €570/t is more realistic. Pricing in the south has not risen as expected, with one mill offering €520/t and another €545/t ex-works, and traders suggest the latter may reduce its pricing given competitive import offers.

Turkish material has been offered into Italy at €515/t cfr and below, and could see the EU's import quota drawdown at a quicker rate in the coming months. Only 14pc of the hot-rolled sheet and strip quota was used as of 20 September, with 3.67mn t remaining, according to European Commission data.

Slab pricing has also come under pressure in recent weeks, after Brazil filled its US quota and started competing in the Middle East North Africa region. The Argus weekly Black Sea slab assessment slipped by $20/t to $485/t fob yesterday.