EU HRC: Market expects increase announcement

There is a a growing expectation that northwest European coil mills will announce increases this month if import offers remain at their current high levels.

Argus' daily northwest European hot-rolled coil index moved up €0.75/t today to €440.75/t ex-works. The forward curve also firmed, meaning a stronger contango, with prices for the next few months substantially above current spot levels. February was assessed €2.50/t higher at €455/t, while March was €461/t. The index's current month-to-date average is €439.75/t.

Import offers into Antwerp are as high as €470-480/t cfr, far exceeding current domestic levels. Northwest European mills offered around €450/t ex-works base before the holiday, but some are now heard at €460-470/t ex-works on the back of brisker apparent demand and firm imports. Should import offers remain at current levels, mills will likely increase their prices to restore the typical €20-30/t gap between domestic and overseas material.

Several service centres feel their stocks are low post-holiday, which could also embolden mills. Nevertheless, some Italian producers are still offering at €420/t ex-works this week, as the market slowly awakens from its festive slumber.

Traders said Asian material has been purchased at $500-510/t fob for European destinations, while Turkish offers are as high as $520/t fob with one mill off market. Russian mills have little allocation remaining for Europe. One trader preferred to buy domestic material because it was cheaper.

Quarterly contracts have been finalised at around €440-450/t with service centres, while half-yearly deals were concluded at similar levels. Italian mills have little incentive to sell into the north because of the comparatively tight differential — it was just €11/t today, with Argus' daily Italian index stable at €429.75/t ex-works.