EU HRC: Mills hold firm

European hot-rolled coil (HRC) mills are confident their offer increases will stick, although they are yet to achieve their latest targets.

Argus' daily Italian index increased by €2.50/t to €421.50/t ex-works, while the northwest European index crept up by €0.50/t today to €429.25/t ex-works. The current northwest Europe month average nudged up to €426.75/t, while January and February forwards were assessed unchanged at €440/t and €450/t, respectively.

Mills are staying firm in their offer stances in both Italy and the north, where spot activity seems to have almost ground to a complete halt.

While the market is creeping up as a result of production cuts and costly imports at €440-450/t cif Italy, the process has been slower than expected. Some expect a sharper jump in the new year after lower import bookings in the past few weeks reduced overseas competition. Buyers are also reluctant to take big quantities, and if they return from the Christmas break to find lead times have extended by a few weeks, they could all feel a more urgent need to buy.

Nevertheless, many buyers across Europe are still not convinced by the uptrend. Even yesterday's court order for the shutdown of blast furnace 2 at Taranto has not raised some buyers' price expectations in Italy. In the north, mills are also pushing for increases but it is still clear to buyers that they are keen for quantities, despite being well booked for January. So some are holding off in the hope prices will tick down.

At the same time, import prices have overshot the domestic increase, and could normalise if third-country mills need to fill their rollings.

Some Italian service centres are claiming to have cancelled HRC orders as they have been unable to achieve further sheet increases. Others said they see processed sheet prices stabilising and rising for immediate delivery and further in the January-February period.

HRC producers are offering as high as €440/t ex-works in Italy, and large quantities have been sold at €425/t ex-works. Some buyers are still able to purchase at €420/t ex-works, but small orders have been concluded above €430/t too. A re-roller was heard targeting €450/t base ex-works for January orders. In the northwest, offers are around €440-450/t ex-works, but again few are paying such levels. Contracts for January-June 2020 look set to finalise around this kind of level too.

In Spain, some service centres are reportedly withdrawing cut sheet offers to end-users as they have insufficient coil stocks on hand. Traders are anticipating an uptick in Spanish activity in the next week or so. One was offering at €440/t cfr for Asian material. A trader had offered at similar prices into Italy, but did some deals below this level for certain customers. One European steelmaker reportedly concluded a deal around €450/t base ex-works in Spain.