UK HRC: EU mills desperate for business

The UK hot-rolled coil (HRC) market remained weak today, with European mills cutting prices to win business and the outsell price deteriorating.

Argus' domestic UK assessment slipped by £5/t to £445/t ($565/t) ddp West Midlands.

One big construction equipment maker secured a three-quarter supply deal at £435/t ddp West Midlands from two large mills — substantially below the pricing on offer from one trader.

Any large enquiries are creating strong competition among suppliers. But even when traders reduce their margins to minimal levels they struggle to compete with European HRC.

Import offers remain uncompetitive, but there is a sense of increased Asian availability on the back of falling Chinese prices. Argus' headline fob China HRC index has fallen by $37/t since the start of May, to $491/t fob.

Most import offers are £490/t ($622/t) ddp West Midlands and above — substantially below the £450/t ddp pricing available from European mills on short lead times. But South Korean offers are around £475/t ddp. Russia's Severstal, with its comparatively low anti-dumping duty of €17.60/t, is also offering around similar levels. It is heard to have offered into southern Europe at $530/t cif, which is below most other import offers.

While some import quotations have slipped, they still need to fall further before reaching parity with European levels. And even then the lead time is less attractive.

There was talk of Liberty Steel Newport being back in the market after having been absent over the past month or so. Most market participants suggest the mill has had slab supply issues, but said its hot-rolling could also have been constrained by technical issues. The mill was offering as low as £435/t ddp and was keen to agree deals, sources suggested. The price environment has been exceptionally difficult for rolling mills trying to compete with cheap integrated offers when slab has been comparatively firm.

The lower end of the outsell market, from service centres to consumers, has eroded in the past week. One large decoiler lost business to another at £490/t ddp for cut S275, which is lossmaking based on both stock and even replacement cost. Falling sheet sales prices do not instill confidence in service centres to pay more for replacement material.