EU HRC: Prices fall amid limited demand

Northwest European and Italian hot-rolled coil (HRC) prices slipped again today as sellers chased limited demand.

Buyers have mostly covered their requirements for the rest of the year and are in no rush to book as they expect prices to fall further going forward in the north, while lower-priced imports are pushing on Italian prices.

Import offers have been heard at above €400/t cfr Antwerp, and domestic mills want to avoid a repeat of October-December last year, when they lost business to imports. This year they would prefer to drop prices to capture spot cargoes, rather than artificially support spot indices by sitting on the sidelines and inviting import penetration.

Italian mills are looking for business in the north, despite the lack of arbitrage, and are offering on short lead times. Imports appear not to have reached the bottom yet as buyers in Italy continue using the declining offers as leverage in domestic negotiations. The fourth-quarter cargoes have yet to be settled. Today small volumes are available at €400-405/t cif Italy and, in some cases, a few euros less, while larger orders could easily warrant a €10-20/t discount depending on the origin, market participants said.

An offer from Turkey into Egypt at $420/t cfr today was gaining traction. Market participants expect $400-410/t fob Turkey to be easily achieved into Europe. Meanwhile, Iranian hot-dipped galvanised and cold-rolled coils were heard offered into southern Europe.

Argus' daily northwest Europe HRC index fell by €1 to €434.50/t ex-works today. The forward curve also dropped again, with October assessed at €434.25/t and November and December assessed at €431/t. The Italian index fell by €1.25/t to €413.25/t ex-works. The south European weekly assessment fell by €20/t today to €390/t cif.

A cold-roller has reportedly seen an uptick in business in the past week, after contemplating shorter operating hours because of a lack of orders. It actually increased its shifts this week to meet brisker demand. The company sells into a variety of sectors and is not as heavily dependent on the weak automotive market as some of its competition is.

The plate market continues to soften on the back of reduced construction activity, with lead times as low as four to five weeks in the north and two to four weeks in Italy. Coil buyers are postponing purchases when possible, in anticipation of reduced pricing going forward. Argus assessed the northwest Europe plate market at €485/t ex-works today and the Italian plate market at €465/t ex-works.

Abundant plate supply from the EU sellers and imports have seen plate prices tumble in the past month, with Korean, Indian and Ukrainian material heard offered a minimum of €20/t below Italian re-roller offers on a delivered basis.