EU HRC: Liquidity very low but some looking at imports

Some buyers are concerned that high import costs will allow domestic northwest European hot-rolled coil (HRC) mills to increase their prices despite a continually sluggish market.

Tightness in the definitive safeguard quota for auto-galvanised is also leading some to believe hot and cold-rolled prices will have to rise.

But liquidity in the north was very quiet again today amid Carnival in Germany, and as participants hope for clarity in US-China trade discussions. Southern buying was also very subdued.

Domestically, May delivery is still available from European mills. As a result, buyers are in no rush to take material, although some are now looking for imported material, with a view that domestic prices will increase. It is a struggle to get imported supply on a similar lead time.

One Turkish mill has offered into Antwerp at around €510-520/t cfr and is in negotiations with a buyer around these levels. A trader has been offered May production, June arrival Turkish HRC at $540/t fob Izmir, equating to around €495-500/t cif Italy.

Asian material has been offered at €520/t cif for May rolling, but this is quite a long lead time given the amount of uncertainty in the marketplace.

Argus' daily northwest EU HRC index nudged up by 25¢/t to €507.50/t ex-works. The discount for Italian material increased slightly to €19.25/t, as a southern mill sold commodity-grade HRC into the Benelux region at €500/t delivered. With freight of around €30/t, this nets back to €470/t ex-works Italy, substantially below offers of €490-510/t ex-works being heard at present.

The Italian mill initially tabled one of the highest-priced offers received by the buyer, but reduced it quickly because of competitive quotes from larger rivals.

Another Italian mill has recently sold into Egypt at competitive levels of around €495/t cif as it looks to regain market share in north Africa, and remove some of the surplus tonnes from the domestic European market.