EU HRC: Spot buyers expect stable pricing

Spot buyers in the northwest European hot-rolled coil market expect to make their next spot purchases at unchanged prices, but foresee a potential slight increase should other mills hike their offers following ArcelorMittal and Marcegaglia.

The fact buyers expect stable prices is something of a win for mills, as their recent announcements and production cuts were designed to stop the market's erosion.

Argus' northwest Europe HRC index was up by €0.25/t today at €470.75/t ex-works. The discount for Italian material relative to the north was €22.50/t, according to Argus data.

ArcelorMittal's previous hike announcements at the end of January and February were not followed by mills and fell flat. But mills are making losses now, and iron ore costs continue to rise. They also need to try and support spot prices as they enter contractual talks with buyers. Some steelmakers are postponing the talks as long as possible in the hope that increases are implemented.

Mills hope to take advantage of an expected normalisation in apparent demand from the automotive supply chain now the destocking phase has run its course. But this is unlikely to represent a big rise in buying, and will probably come after the negotiations are concluded.

Some market participants expected Turkish mills to return to market today at $520/t fob on the back of the Section 232 tariff being cut to 25pc last week, but no firm offers were heard. Turkish mills are offering July shipment, which is quite far out given how soft pricing has been, and the short lead times of domestic European producers.

The fact that Turkey can theoretically sell into the US met with little reaction from buyers, as there is no real arbitrage for them to do so on hot-rolled coil, or cold-rolled coil or hot-dip galvanised just yet. Buyers might be tempted by Turkish tonnes should domestic prices rise.

Some southern buyers have reacted to recent increase announcements, with domestic Italian pricing already up by €10/t for some. Italian service centres have reported pricing of around €470-480/t delivered base, depending on tonnage.