EU HRC: Import offers continue to slip

Softening import prices weighed on European hot-rolled coil (HRC) values today.

Buyers were using talk of a deal into Antwerp for Indian material at €430/t cfr as leverage with domestic mills. One trader even offered commodity-grade material of undisclosed origin into Antwerp as low as €425/t cfr, although this appears too low to be repeatable at present.

Indian pricing into Italy was at €420-430/t cif, although lower prices were heard to be available for large tonnages. Market participants cited multiple transactions for Turkish HRC at €425/t cif Italy, with bigger-volume sales heard as low as €420/t cif.

Japanese mills are back in the market, which, with the competitiveness of CIS mills, is exacerbating cautious sentiment. One Japanese seller offered $465/t cfr Jeddah for 1.8mm-thick material and higher.

The Argus daily Italian HRC index edged up by €1/t to €438/t ex-works today. The daily northwest Europe HRC index slipped by €1.50/t to €457.75/t.

An Italian mill was officially on the market at €450/t ex-works, but was heard selling at €450/t delivered, while another seller is understood to have agreed to €435/t ex-works.

Mill sources reported a slowdown in orders from all sectors — not just the automotive sector — and questioned how lead times would progress over the fourth quarter. One mill said its lead time was around six weeks, but said it could shorten without any uptick in demand. Expectations of high import receipts in the fourth quarter, especially in southern Europe, have prompted renewed discussion about the necessity of further production cuts to prevent more price erosion.

Buyers are still taking only what they need, given the uncertainty over price and demand over the rest of the fourth quarter and into next year.

One supplier to the automotive sector said order intake remains down by at least 20-25pc, and that its steel requirement is being met through contractual volumes, leaving it out of the spot market. Mills are still struggling to find homes for this surplus material, and are now having to compete more with Indian and Turkish coil.

The situation in Germany remains particularly poor, with growing concerns over the financial health of service centres and other consumers. Despite the pain that European mills have already faced this year — amid rising costs and softening prices — 2020 could also be tough. Contract-focused mills have been insulated from the spot market decline to some extent this year, but they might have to sign deals for next year at much lower levels.

There was still talk of one white-goods producer agreeing an annual deal at a €50/t discount to this year. Some mills are not yet ready to talk about contractual volumes for next year, given the pressure in the spot market. At the same time, buyers think they will secure lower prices in a few months' time, should demand remain weak and import pricing stay competitive.