EU HRC: Traders looking to clear positions

Position cargoes of hot-rolled coil (HRC) were heard in discussion today, as some traders seek to minimise the risk from weakening sentiment in Asia.

The Argus daily Italian index edged up by €1/t to €449.25/t ex-works. This is up by €20/t since 2 January. The northwest European index increased by €2.25/t to €464.25/t ex-works.

As European prices strengthen, a north European supplier has concluded a May delivery sale at €490/t ex-works today, up from €455/t ex-works for March delivery material. The sale took market participants by surprise. This coincides with sheet prices in Germany rising to over €510/t ex-works. The mill had increased its offer to €480/t ex-works for April production.

With lead times slightly improving in Europe — a major producer is offering April production coils in the north and has second half of March availability in the south — buyers concerned about the recent uptick in European prices are enquiring with traders.

The lengthier lead times in the north, reduced production and high import prices have some buyers expecting German mills to be unwilling to make any concessions, despite a general reluctance to commit to large volumes. Third-country offers into Antwerp at around €480/t cfr are lending support to the market.

A large Turkish importer confirmed that it was getting an unusually high number of enquiries from France and southern Europe — likely as a result of the force majeure announced at Arcelor's Fos sur mer plant and uncertainty at Ilva in Italy.

But the Italian market has cooled off slightly, as some buyers are not willing to accept above €450/t cif, owing to large stocks booked at lower price. Mill-side sources also report difficulty in achieving above €450/t ex-works amid lacklustre spot demand.

But a trader has sold Indian HRC from port stocks at €470/t cif this week, so clearly not all buyers are as well stocked.

There are mixed signals in the market, as an offer was made from a European mill at $540/t cfr Turkey, according to a Turkish producer. But sources say the mill in question has no ex-EU export allocation.

A large German mill recently won a tender for API quality coils in north Africa. The steelmaker has reportedly had some issues because of a problem with one of its ladles, helping to tighten the supply and demand balance. Another mill is booked out until June having oversold its capacity, and is reportedly having issues securing substrate.