EU HRC: Spot availability dwindling in north

Northwest European coil prices firmed again today as mills maintained their firmer stance and availability of spot tonnes continued to dissipate.

Argus' daily northwest Europe hot-rolled coil (HRC) index rose by €2.50/t to €420.25/t ex-works today. The daily Italian index rose by €4/t to €411/t ex-works, despite growing talk that ArcelorMittal will reach a deal with the Italian government over its Taranto plant.

The northwest Europe forward curve firmed, with December assessed at €437.50/t and January rising more strongly to €445/t. The November month-to-date average is €414/t.

ArcelorMittal is in negotiations with the Italian government regarding a new industrial plant, which sources suggest would involve production of around 5mn t/yr and a temporary layoff of 4,000 staff.

Service centres in northern Europe suggest that activity is brisker, with buyers looking to secure tonnes ahead of a price increase, and are talking of stronger production rates for the first quarter. Some service centres are even taking orders for January, they suggest.

The rampant destocking of recent months — particularly in Germany — is over, and buyers are now looking to replenish.

Traders report a slight uptick in enquiries, but price ideas remain way below the €440/t cfr Antwerp/Ravenna and higher that they are indicating.

Buyers are reluctant to fulfil their purchases at the €430-450/t ex-works that northwest European mills are offering, in case such prices do not materialise. But mills are essentially out of the spot market and concentrating on contractual talks. Even those mills that were aggressive for December arrival have stepped back.

In their half-yearly talks with carmakers and their supply chain, mills continue to target declines of €60/t. Quarterly contracts with service centres should be finalised by the holiday season, and result in declines of €30-40/t.

In Italy, the upward march of recent weeks could be abating, with some buyers still more content to destock amid the current uncertainty, and others having fulfilled their requirements.