UK HRC: Weak sheet hits coil market

Continued weakness in outsell prices — from service centres to end users — impacted the UK hot-rolled coil (HRC) market this week, as buyers pushed back on the currency-related increases sought by some sellers.

Cut sheet has been sold as low as £470-475/t ddp West Midlands, almost in line with import offers for third-country HRC. Traders were unable to conclude deals on commodity grades given weak domestic prices, long lead times for imports and the weak pound relative the US dollar.

A domestic mill tried to move its speed-stock HRC price to over £450/t ddp West Midlands, as did one Benelux-based producer owing to the weaker pound, but buyers refused to pay these prices. There was buy-side talk that the UK seller had actually dropped to £425/t ddp West Midlands, but this was not confirmed and deemed by most as too low. The Argus domestic UK HRC index was static at £445/t ddp West Midlands today.

One mill-owned distributor was still reportedly pursuing business aggressively, telling a customer to "name" the right price, and they could deliver now and invoice at the end of August. Demand was weak, according to most, with one toll processor suggesting business was quiet.

One European seller, who noted the negative impact of the weaker pound, has just finalised one of its last contracts for the second half of this year. The buyer in the automotive supply chain was seeking a £40/t drop, but settled upon a fall of £18/t.

The seller has been targeting around £470/t ddp in the spot market, but has been unable to conclude any deals at these levels as other mills are competing to make sales.

One Italian steelmaker has been seeking to sell cold-rolled coil and hot-dip galvanised to the UK, and has even offered some HRC. The producer has found it difficult to compete with integrated suppliers given the high cost of its substrate, and the weaker pound.

One mill said there was a lot of discontent with the prevailing index used in the UK market, which buyers and sellers use to amend their contract pricing based on the monthly change in the index. One steelmaker said the index is 4-6 weeks out of touch as soon as it is published, and not as representative as other indexes.