EU HRC: Import arrivals subdue prices, activity

Turkish hot-rolled coil (HRC) represented over 50pc of the European import market in January, accounting for 497,010t of the record 960,021t that arrived.

Turkey has never sold so much into the EU in one month and its imports were up by over 100pc from 247,008t in January last year. Italy took more than 217,000t.

Mills in Turkey were very competitive last year as the plunging lira and softening domestic demand led them to turn heavily to export markets. And the doubling of the US Section 232 tariff to 50pc in August meant they had to rely strongly on the EU.

Turkish HRC prices fell from $605/t fob on 3 August to $475/t fob on 4 January, according to Argus data. This resulted in a lot of material being booked over the second half of the year, while supply ordered in the fourth quarter will have primarily arrived in January.

Given the amount of imported material swilling around Europe, it is little wonder that domestic mills are having a hard time trying to secure price increases. The Argus domestic northwest Europe HRC index has been below €510/t ex-works since 25 January, despite €60/t of increases being announced. The index was static at €508.50/t ex-works today, up by just €5.50/t since ArcelorMittal's first €30/t announcement at the end of January.

Sellers expect the market to remain lackadaisical until the imported material has worked its way through the system, anticipating an uptick in activity from the second half of April and into May. As it stands, European mills are the most competitive and on short lead times. They have been hit hard by a 10-15pc fall in automotive demand, which some suggest feels more like a 25pc drop because it is the zeitgeist to write about Germany's economic woes — the barrage of negative press toward Europe's largest economy is heightening the nervousness of buyers and making them withhold purchases despite domestic material being attractively priced.

Turkish offers have come back a touch from $540/t and above depending on the mill, with some sales done previously into southern Europe at $520/t fob, but the differential to domestic European material is slim to none. One trader has been offering into Antwerp of late at around €495/t cif for Asian material, for June arrival.

If mills fail to get increases in the second quarter, they may struggle to achieve them heading into the typically slower second half of the year. That said, the European safeguard is starting to impact some products, such as non-passivated galvanised, where China has fulfilled its allocation and the residual quota is also fully utilised.