European steel coil prices soft, outlook uncertain

Northwest European hot-rolled coil (HRC) prices remain under pressure amid uncertainty and competitive offers from the south.

A service centre source in the Benelux region said he booked Italian coil at €525-530/t on a delivered basis in the last week or so. Northern European mills have been trying to maintain prices at €550/t ex-works and above, after they came under pressure from slow apparent demand and competitive import offers in recent weeks.

Southern European steel demand is sluggish, particularly in Italy, where wider macroeconomic concerns and the government's confrontation with the EU is having an impact. Italian prices are now below €500/t ex-works as mills try to incentivise wary buyers. One source said outsell prices from service centres to end-users have also slipped by €20-30/t in recent weeks, reflecting the downbeat economic outlook and competitive Turkish imports.

Turkish coil has also been competitive into the UK, where a recent offer of £510/t ddp West Midlands has pressured domestic mills' quotations. Falling Turkish prices and foreign exchange fluctuations have kept import offers competitive, according to one trader.

One UK steelmaker offered £515/t ddp West Midlands for first-quarter 2019 delivery, slightly below expectations of other western European mills, at £530/t ddp, West Midlands service centre sources said.

Stocks at one port in south Wales are apparently down to 100,000t, despite some traders holding relatively high inventories. But nobody other than the most upbeat stockists is suggesting any shortages or inventory gaps, and there is a belief that material could build up at ports as trading firms seek to avoid the 25pc import duty safeguard and deliver into the definitive quota from February.

"Turkey has a very quiet domestic market and cannot export to the US so they have been very aggressive selling into the UK and EU. Russia lost a lot of sales into Turkey, so they are battling the Indians in Asia and demand is down there seasonally, so you have a lot of coil out there and not so many buyers," one trader said.

Uncertainty from the definitive safeguarding investigation, the UK's impending EU exit, the US' 50pc import duty on Turkish steel, and wider trade war fears, are all impacting sentiment, a buyer said.