EU HRC: Mills reassess offer levels

Some European mills are reassessing their hiked hot-rolled coil (HRC) offers after other sellers failed to increase, import prices slipped and buyers remained reluctant to purchase.

Argus' daily northwest Europe HRC index slipped by €2.25/t to €459.25/t, its lowest level since inception in November 2018. The daily Italian HRC index decreased by €2.50/t to reach €437.25/t ex-works, again its lowest level since launch. The cif southern Europe HRC assessment fell to €430/t.

Sellers were targeting a €30/t increase at the end of August, but some mills are still selling at old levels and lower. It is believed that prices could slip further on continued low demand, particularly from the integral automotive sector.

A Turkish mill was reported to have sold 20,000t to a pipemaker at €440/t cif Italy for November shipment, although this seemed high for the amount and given that domestic sellers continue to acquiesce to the same level and below on an ex-works basis for October production.

Indian material was available at €430/t cif Italy, while Turkish material was offered into Spain at €440/t cif. Similar levels were also quoted into Antwerp but demand was tepid, given sufficient availability from domestic sellers, and a belief the market could soften further.

Sentiment has failed to be stimulated by the European Central Bank's announcement of a fresh round of bond purchases and reduced interest rates, as its impact on the real economy is not yet clear. Some say ongoing weakness in the automotive industry is still the primary market driver, particularly in the north, and it could continue to drag on wider manufacturing. One seller reported HRC prices in Germany "collapsing" to below €460/t delivered base; another seller recently echoed these sentiments, suggesting deals had been done as low as €440/t ex-works base.

One German re-roller has seen order intake fall to 30pc of levels seen last year, while larger re-rollers have adopted short-time work and/or layoffs.

Despite the pervasive bearishness, mills are hopeful that the market might turn. Given the uncertainty and weak environment, buyers are procuring hand-to-mouth and keeping a close eye on working capital. As a result, sellers think the market might snap back quickly, should it turn. An Italian mill will be essentially off line for a few months from the end of November, which will reduce availability in the marketplace; nevertheless, no buyer is in a rush to book, given the current environment.