EU HRC: Market remains becalmed

The northwest European hot-rolled coil market remained subdued today, with sufficiently stocked service centres still shunning the increased attempts of major mills.

Argus' daily northwest European HRC index nudged up by €1/t to €507.50/t ($573/t) ex-works in quiet trading. The discount for Italian material compared with northwest European HRC moved out slightly to €22.50/t from €20.75/t.

A German steelmaker has been offering hot-dip galvanised below €600/t ex-works as it grapples with the ongoing slowdown in automotive demand. Talk that a German carmaker may lay off some staff stoked concern that it might reduce production, and thus steel procurement volumes.

The potential for Section 232 tariffs on cars and parts into the US was also something of a millstone around the neck of galv pricing, despite China's auto-galv quota into the EU already being full and the residual quota being exhausted.

Sub-suppliers to the auto industry still have fairly high stocks, which they are looking to sell into industrial sectors or other service centres.

But automotive demand was recovering somewhat, according to one seller. As a result galv pricing was moving back to €600/t ex-works and above, and demand from other sectors was not bad, he said.

The squeezed differential between southern and northern HRC pricing led some to believe the northern market will firm — what happens in the south typically filters into the north, and Italian pricing has moved up on the back of firm import offers.

Import pricing has started to recede, with buyers preferring domestic material on low lead times. Buyers suggest it is still possible to get April deliveries, despite mills saying they are booked into May, whereas imports booked now would probably be for June arrival.

Southern mills are still competitive into the north in the low €500s/t delivered region, suggesting they are selling below headline offers. Sentiment in Germany remains particularly weak.