UK HRC: Seesawing sterling stymies trade

Sterling volatility dampened trade in the UK hot-rolled coil market this week, after the UK Parliament passed an amendment yesterday evening that could rule out a no-deal Brexit.

The Argus weekly domestic UK hot-rolled coil assessment dropped by £7.50/t to £480/t ddp West Midlands, primarily on the back of the stronger sterling but also competitive European pricing.

The pound appreciated on the parliamentary news, making the cost of imported steel immediately cheaper despite ostensibly unchanged dollar-denominated offers. It also rose against the euro, further entrenching the dominance of western European mills, which have the shortest lead times and most competitive pricing at present. But buyers were reticent to commit as they forecast potential further gains in sterling should any Brexit deal be reached.

One trader said he was having to act primarily as a currency trader, taking a view on the increasingly volatile pound, as well as steel market direction.

Sufficient imported tonnage was arriving to allow buyers to hold off longer before returning to the market. Decoilers received offers of Turkish material at £485/t ddp West Midlands, for June arrival. Traders said offers were around £490/t ddp from Turkey but most agreed they could get better prices.

One trader was offering newly arrived Turkish material at £490/t from stock. Other traders were still trying to hold at £500/t ddp and above, but their inventories were not moving particularly quickly.

Demand was reportedly quiet and some service centres were concerned their buyers stockpiled ahead of Brexit and will have too much material after as a result. Outsell prices remain uncompetitive to service centres paying more for replacement material too. A mill-owned distributor was taking cut sheet orders at £520/t ddp. One independent service centre has dabbled around these levels of late, after being notably quiet in the marketplace for some time.