UK HRC: Market flat as Brexit roils pound

The UK hot-rolled coil (HRC) market was flat this week, with service centres in no rush to buy and traders reluctant to offer new material as they were concerned about pound fluctuations.

Western European material was available at around £480/t ddp West Midlands on lead times of 4-6 weeks. A German mill was offering in the mid-£480s/t ddp. Argus' weekly assessment remained unchanged at £480/t ddp.

Turkish suppliers were struggling to break below £500/t ddp West Midlands, especially after the renewed spectre of a no-deal Brexit saw the pound weaken. There was no need for buyers to consider importing given soft domestic prices and short lead times. Asian import offers were into June, and July for hot-dip galvanised, and the summer months are typically slower as people take holidays. There was talk that Indian pricing had risen by around $20/t.

Traders surveyed by Argus were happy to wait until there was more clarity over Brexit, and a potentially less volatile currency.

The average cost of service centre stock was still expensive relative to outsell prices, the lowest of which were around £520/t ddp for cut sheet. Service centres were eyeing April negotiations with their customers in the hope they could maintain slim margins.

There is still enough coil at quaysides after high import arrivals in January. The UK imported 47,555t of third-country HRC that month, according to Eurostat, the largest volume of non-EU material it has accepted in recent memory. Turkey was responsible for over 30,000t.

There was talk of a domestic mill targeting an increase for April, but buyers viewed it as unlikely to stick without a marked change in demand.