EU HRC: Market continues to buck global trend

The northwest European hot-rolled coil (HRC) market continued to buck the emerging bullish global trend today, with prices softening despite increased announcements and firming world markets.

Argus' daily northwest Europe HRC index fell by €1.25/t to €504.25/t ex-works.

Some mills still have March rolling available and others can fulfil March arrivals. Service centres remain well stocked and are watching their inventories devalue as prices soften, which is not encouraging them to commit to new rolling.

Slipping replacement costs are reflected in the increasingly competitive outsell market as service centres look to destock, and as a result they are reticent to purchase replacement material.

Mills are delivering on time — even those with a reputation for being late — which is perhaps testimony to weak order books. Two of the continent's larger mills are reportedly aggressive despite forthcoming €20-30/t increase announcements circulating the market.

Italian pricing at €450-€460/t ex-works means material can be delivered into southern Germany at around €480/t — a very competitive price. This is up slightly from a few weeks ago, and sentiment does appear to have strengthened in the south as Turkish import offers and lead times have edged up.

Turkish, Asian and CIS prices increasing, alongside rising iron ore and scrap — and the spectre of the wet season impacting Queensland coking coal production — have strengthened sentiment outside Europe. News that Brazilian mining firm Vale will be reducing pellet output by around 11mn t/yr in the next 1-3 years will be a concern for European mills that prize such material, and could provide an immediate cost-push.

Steel traders servicing the continent have been positioning for price rises on these factors, although buyers are still disbelieving. One Benelux-based service centre received an offer for second quarter delivery tha was €20/t higher than previous offers.

Summary of market activity heard by Argus:

HRC, Europe: Tradable value around €500/t ex-works, according to large buyer

HRC, Europe: Tradable value around €505/t ex-works, according to buyer

HRC, Europe: Tradable value around €500/t ex-works, according to seller

HRC, Europe: Italian material available at €470/t ddp, according to Benelux-based buyer

HRC, Europe: Italian material available at €470/t ddp, according to seller

HRC, Europe: Tradable value around €450-460/t ex-works Italy, according to seller

CRC, Europe: Brazilian material offered around €550/t discharged fot, according to buyer