UK HRC: Stronger pound cuts import prices

The recent appreciation of the pound sterling pressured UK hot-rolled coil (HRC) prices somewhat this week, alongside weakening offers for Turkish and Indian material.

Argus' UK HRC assessment slipped by £2.50/t to £440/t ddp West Midlands today.

Sterling's appreciation, combined with softening prices in the rest of the world, saw import offers fall to £460/t ddp and below for S275 HRC for November-December arrival. However, buyers remained disinterested as they had sufficient stock levels and were concerned about further softening in prices, as well as Brexit-fuelled currency volatility. Domestic European material also remained cheaper.

Low scrap and slab costs were also expected to filter into Turkish offers, with the country's flat product mills in the $460-465/t fob range, although some were offering higher.

One trading firm was offering quayside inventories at £459/t ddp for typical speed-stock sizes from Turkey and a domestic mill. It had 300-400t in stock. Another trading firm had more than 10,000t stocked across HRC, cold-rolled coil and hot-dip galvanised.

Mill sources said they had signed fourth-quarter contracts at rollovers, or slightly lower for larger buyers. But those that have already placed may now believe they booked too early, given falling prices.

One mill in Benelux restarted its HRC line, although some say orders could be delayed slightly. The steelmaker informed its customers that a blast furnace is being taken off line for maintenance, perhaps to shore up the supply and demand balance.

Service centres suggested that August was a weaker month than expected, even factoring in seasonally slower trade, and activity has not yet picked up in September. As a result, outsell prices continue to soften and margins are under pressure, given hand-to-mouth purchasing attitudes throughout the supply chain.

Cold-rolled coil prices have also come down quite substantially. One Korean offer was reported at £495/t ddp West Midlands, leaving little margin given costs, financing and the mill price. Other offers were £504-505/t ddp West Midlands for Indian and Japanese coil. One European mill reduced its price to £505/t ddp, or slightly below.