EU HRC: Small buyers unwilling to take risk

Small hot-rolled coil (HRC) buyers deem the supply situation in Italy to be too risky, and are either looking for alternative sources or delaying purchases.

Some large customers are willing to negotiate tonnages with one mill that has seen production disrupted — a pipe-maker is in talks for a 30,000t cargo.

The Argus daily Italian index increased by €0.75/t today to €418.75/t ex-works. The northwest EU index nudged up €0.25/t to €427.5/t ex-works. Spot activity in the north has ground to a halt of late with mills and customers focusing on contractual tonnage — steelmakers suggest they have sold out December production and have no desire to play in the spot market because they allude to strengthening lead times.

Some German service centres suggest their competitors are agreeing to €80/t declines with automotive customers for January-June 2020, despite not being able to secure such levels from mills.

While many buyers are enquiring with both local European producers and importers, not all of them are in a rush to buy because of the approach of year end and concerns over price volatility.

Some Italian mills have been successful in closing smaller tonnage deals this week, but overseas mills are not keen to commit — Turkish mills expect scrap costs to firm further and do not want to sacrifice any margin.

An offer was made to east Europe at $490-495/t fob Turkey. Turkish buyers also confirmed receiving offers from European suppliers after an offer for small tonnages was heard into north Africa from a Benelux-based mill yesterday.

Meanwhile, the saga between ArcelorMittal and the Italian government continues, with the latter rejecting the company's plan for the ex-Ilva assets. Unions have called strikes for 10 December. Some buyers remain sceptical that ArcelorMittal will pull out of the investment.