EU HRC: Some import offers slip

Hot-rolled coil (HRC) import offers into Europe are beginning to slip on the back of prolonged weakening in Chinese and southeast Asian pricing.

It is understood that a large buyer is in negotiations over a cargo of Indian material at €470/t cif Italy, while a Russian mill offered at the equivalent of $530/t cnf. Although market participants are expecting Turkish producers to raise prices after the Eid holiday, this is becoming less likely as Turkish mills have struggled to achieve $530/t fob.

The weakening in southeast Asian demand and fob China pricing poses a risk to Turkish mills, as the country is a primary market for CIS sellers, which have also been moving tonnes into Vietnam.

Trader offers into Europe around €490/t cif and above have failed to gain traction, with buyers preferring domestic material on shorter lead times.

At current spot market prices — the Argus northwest Europe index is flat today at €479.75/t ex-works, while the discount for Italian material moved to €6.75/t from €7.50/t yesterday — most producers are making a loss, with many enforcing production cuts.

Despite its announcement yesterday about temporary redundancies of 1,400 employees, ArcelorMittal Italia is not planning to cut production further to the previously announced slow down to a 5mn t/yr run rate — the rate at which Ilva was operating in recent years. The measure will run for 13 weeks starting 1 July and will see production over July, August and September fall and likely lengthen lead times, which should strengthen prices, market participants said. One source said that ArcelorMittal's lead time is now into August, longer than some of its European peers.

Not all buyers are convinced of the uptrend, however. One large original equipment manufacturer has been offered contractual tonnes for the second half of the year down by €20-30/t on the first half, but is refusing to settle as Chinese prices are still falling. European mills are still competitive into the Turkish market, one trader said.