UK HRC: Market nudges up as mills target rises

UK hot-rolled coil (HRC) pricing nudged up this week after Tata Steel announced a £45/t increase effective 1 February.

The rise caused pause among decoilers, who have been selling cut sheet as low as £420/t ddp for the first quarter. The average cost of stock at decoilers is now £420-430/t, leaving them deeply in negative territory at current sheet prices.

European mills have a captive market with import offers from Turkey and India at £430/t ddp West Midlands and above, an untenable level for buyers. Firm scrap and rising slab costs are currently supporting import quotations, though further strengthening in the pound could see them become a touch cheaper. One seller said a domestic mill offered above £400/t ddp West Midlands earlier this week for typical speedstock sizes of S275, but a European seller was still heard to be closer to £380/t ddp.

Sentiment is still highly confused despite Tata's increase announcement. A trader was offering Turkish and domestic UK material ex-stock at £399/t ddp West Midlands but was not getting much interest from buyers, suggesting that they are not too concerned about firmer pricing. Demand is still constrained by the impending election and lack of conclusion to Brexit.

Sellers said that service centres were returning to the table, but buyers said they were worried to commit in case rises did not stick; previous attempts to push through price increases this year have failed, leaving mills negotiating from a position of marked weakness.

Some questioned the rationale for Tata's rise being effective from 1 February, suggesting that the company was trying to ensure strong orders for January rolling.

An Italian seller was offering cold-rolled coil into the UK above £500/t ddp, but at least one decoiler was able to buy at closer to £450-460/t from a large European seller.

Argus' domestic UK HRC assessment rose by £7.50/t today to £382.50/t ddp West Midlands.