EU HRC: NW Europe index nudges up

The Argus domestic northwest European hot-rolled coil (HRC) index rose by €1/t to €479.75/t ex-works today. The discount for Italian material narrowed to €7.50/t from €7.75/t yesterday.

The recent slight reversal in the European market is prompting some mills to target increases for second-half contractual talks, despite those already finalised €20-35/t lower than the first half of the year.

Market participants are cautiously optimistic about a potential uptick in the automotive industry in the following months, with the latest data from the German automotive association showing an increase in passenger car production and new registrations in May. But auto exports continue to fall, with US trade relations and Chinese demand causing uncertainty, and HRC sales in Germany remain sporadic and for smaller tonnages.

A potential second round of increases from a major European mill has not materialised so far. Turkish mills were heard to be eyeing an increase in offers after the holiday period next week as a result of the anticipated announcement, although market participants said that sellers were previously agreeing to discounts to their target levels of $520/t fob.

Some buyers in Italy have accepted as high as €485-490/t ex-works, but a seller remains firm on €510/t ex-works offers. Lower levels are available from other mills and discounts have been given at €20/t from list prices of €480/t ex-works. Lead times are 4-6 weeks on average.

But this afternoon ArcelorMittal Italy announced that it will temporarily lay off 1,400 workers each day at its Taranto plant for a 13-week period.

"The market conditions are really critical throughout Europe. I want to reiterate that they are temporary measures, steel is a cyclical market," managing director Matthieu Jehl said.

The company cited worsening economic indicators in Europe, the slowdown of the automotive industry, reduced consumption of steel, lower incoming orders, increased imports and inventories above normal stock levels as the reason.