EU HRC: Import offers fall but still not cheap enough

Import offers into the European hot-rolled coil market have slipped a touch but are still not cheap enough to tempt buyers away from domestic material on short lead times.

Buyers want to negate safeguard risk wherever possible and still have competitive offers from local mills keen to fill their order books.

Turkish material has been offered into Antwerp at €485/t cif and Iberian buyers are bidding in the low €460s/t cif on the back of some competitive sales to Italian tube-makers and a Spanish automotive sub-supplier.

Buyers are anticipating hungry importers dropping offers heading into the second quarter in order to get bookings for third quarter arrival. Some suggest European mills may even follow suit, to avoid a repeat of the third and fourth quarters of 2018 — when domestic quotes were substantially above Turkish offers, resulting in significant third-country bookings.

Recent slippage in Chinese pricing — on the back of the weak auto and manufacturing sectors and competitive Turkish quotes into Asean — is also fuelling bearishness somewhat.

The parity between imports and domestic material of late means there is likely to be less stock on the ground into the second and third quarters. But a pullback in industrial sector demand, alongside the well-publicised auto issues, mean stock levels feel higher than they otherwise would have if requirements were stable.

Argus' domestic northwest European HRC index slipped €1/t to €506.75/t ex-works today. The cif southern European number slipped €10/t to €475/t.

The UK market remains fairly quiet. Turkish offers have pulled back to £485/t (€563.68/t) ddp and slightly below, but western European mills are below this level, and still hungry for tonnes. Traders are trying to maintain £500/t ddp for their dock stocks, which they wish were lower, but buying is not particularly brisk.

Argus' UK HRC assessment was static at £480/t ddp West Midlands today.