EU HRC: Market swinging to sellers’

The Italian hot-rolled coil (HRC) market is slowly becoming a sellers' market after multiple months of declines.

The Argus daily Italian index rose today by €2.50/t to €424/t ex-works. But production cuts, strong domestic demand in Turkey and high export offers and raw material costs are balancing out low European demand. As a result, Italian mills are starting to conclude higher-priced business, but for limited quantities.

Amid the Ilva uncertainty, large buyers, convinced the mill would operate at reduced production, have covered first-quarter spot needs, with some market participants expecting a lot of Russian material to arrive in January-February. Even some mid-sized buyers say it is not reasonable to wait any longer to conclude purchases.

Turkish mills continue to offer for February shipment, with one quoting at $490/t fob today. Italian mills are holding firmer on their new offers, but it remains uncertain what quantities they have to sell for January and if they can hold off long.

In any case, activity will likely be limited in the run-up to Christmas, with developments around Ilva likely to sway buyers with remaining requirements whether to purchase or not.

The northwest Europe index nudged up by €0.50/t today to €429.75/t ex-works, leaving the premium to Italy at a mere €5.75/t. It is not inconceivable that Italian prices could be at parity to, or above, the north in the next few weeks.

In the north, where spot liquidity has been low, there is not only a wide spread between bids and offers, but also between the offer levels of certain mills. One Benelux-based seller was reportedly still willing to sell in the low €400/t ex-works range, as it looked to move some spot cargoes. But another large steelmaker held firm at €440/t ex-works, and one mill that had been competitive in recent weeks is now out of the market.

Russian material was offered into Antwerp at €455/t cfr, including duty. This level was unpalatable to buyers, but traders were struggling to find much lower, with some Indian mills booked out until March, Turkey firm and export allocations much reduced. The same seller quoted into Iberia at about €475/t cfr effective for S235 material.