EU HRC: Weak demand hits northern pricing

Northwest European hot-rolled coil (HRC) prices slumped today as buyers continued to withhold purchases given huge uncertainty over future price direction and demand levels.

Argus' headline daily northwest Europe HRC index dropped by €5/t to €424.50/t ex-works. The daily Italian index was static at €403.25/t ex-works. The northwest Europe forward curve also declined, with October assessed at €437.50/t, and November and December both at €428/t.

Mill sources surveyed by Argus could not see any events likely to change the exceptionally downbeat mood in the market. Buyers do not want to build stock after they were left holding too much inventory at the start of this year; the reduction in apparent demand has been much greater than the fall in real demand, and service centres are only taking what is absolutely necessary.

Mill lead times are so short that buyers are concerned about ordering now for January onwards in case the material arrives beforehand.

The impending year-end is also dissuading customers from committing. Mills are having to drop towards import levels, closer to €400/t cfr Antwerp, to win business, otherwise customers just refuse to procure.

Given the narrowing differential between northern and southern Europe, there was an expectation that sellers in Germany and the Benelux might try to move material into Italy.

One seller said that demand would be stronger in the first quarter of next year as people will need to restock, but the prices at which they will procure are not yet clear. One mill is not operating most of its European hot-dip galvanised lines for two days per week, and is also close to shutting a service centre in Germany that typically deals in structural grade galv. A German blast furnace is also likely to be off line for refurbishment for longer than expected given weak market conditions.

Mills are trying to postpone contractual talks for the first half of next year, or shorten terms to avoid locking in losses.