EU HRC: Italian discount increases as mills drop prices

Italian hot-rolled coil prices are under increasing pressure as mills drop way below their reported offers to move tonnes.

One steelmaker was selling as low as €480/t delivered, while another was selling to a big distributor at €470/t ex-works. Headline offers are closer to €485-495/t. The latter mill has sold competitively into the Benelux region too, in the low €500s/t delivered, despite initially having one of the most expensive offers around.

As a result the discount for Italian material to northwest European HRC increased again today, to €28.50/t. The Argus daily northwest Europe HRC index was static at €507.50/t ex-works in quiet trading.

Appetite for imported tons in southern Europe has dissipated after bookings in the last 7-10 days at $520/t fob Turkey from an Izmir-based mill. One trader said he was still seeing appetite around €500/t for stock sales, but there was little interest in May-June arrivals of fresh third-country production.

Some northern buyers have exhibited appetite for imported tonnes below €500/t cif Antwerp of late, but for limited quantities. Buyers in the north are split in their views. Many are reticent to book imports given the lack of arbitrage with domestic material, which is available on short lead times, and the uncertain environment. Others are keen to diversify their supply sources in case domestic pricing firms up given reduced quotas for non-passivated automotive galv, and firm raw material costs.

The second quarter is typically the strongest for European mills. Should they fail to secure increases during the period, it could be difficult for them to push prices later in the year.