EU HRC: All eyes on Turkey

A large Italian buyer has made bids for hot-rolled coil (HRC) at $480/t fob Turkey, but it is unclear if any seller has accepted this level.

One Turkish mill has rejected a bid at this level, as it is resisting reducing prices below $500/t fob because of limited capacity. At the same time, the buyer was heard to have recently announced a €10-15/t increase on its finished products — it has been struggling to achieve €530/t ex-works for galvanised coils lately, market participants said.

But some regard $480/t fob as reasonable for large tonnages, especially for certain Turkish mills, and the deal is circulating in the Turkish market. Some traders in Europe still had offers from Turkey at $515-520/t fob, but after the latest scrap fall, expectations for workable levels now stand at $480-490/t fob and even below. One trader has been offering to the north at around €465/t cfr for the last week or more, but is still not getting interest from buyers that say lower prices are available domestically.

In the last few days, Italian HRC producers agreed to as low as €450/t delivered for their largest customers, but this price is not available for mid and small-sized orders. Buyers in northern Europe had offers from Italian mills at €450-460/t ex-works, while to Italian service centres the offers stand at €460-470/t delivered with four to six weeks lead times. But the market in Italy is not in a position to absorb any increases, although sales to northern Europe may lend support.

The Argus daily Italian HRC index is stable today at €444.25/t ex-works.

The northwest European index edged down by €2.75/t to €470/t ex-works with buyers in Germany alluding to soft sheet prices and fears over competitive imports. Import offers as low as €460-465/t cfr, €20/t below some offers currently heard, are failing to attract interest as large buyers say they can still secure tonnage around €450-460/t delivered from domestic producers. German service centres also bemoan the lack of momentum in sheet prices as they compete for business given still muted demand. Commodity grade S235 dry sheet is still as low as €510/t delivered or thereabouts in south Germany, while pickled and oiled S355 is still transacting around €590/t delivered — neither of which provide much margin or inspire buyers to pay current offers.

Central and eastern European material is still being offered in the north at around €470/t delivered, and buyers are also trying to get competitive Italian quotes given the softer undertone in the south. All eyes in the north and south are still on Turkish scrap, after the strong fall yesterday — Argus' benchmark daily cfr Turkey HMS 1/2 80:20 assessment fell by $16.50/t yesterday to $251/t cfr, and shed another $3/t today to $248/t cfr, its lowest since 24 October, 2019. Buyers seem to have pivoted from hoping for cheaper Turkish pricing to expecting it after the steep drop in scrap. "The bottom always gets tested twice," one trader quipped — European prices have had momentum of late, supported by brisk demand, firm import offers and strong raw materials. But mills failed to achieve the €500/t level they were targeting in the north, and now the global market is taking a sharp turn downwards, although the fall is not underpinned by much activity with China still out. Argus' fob China HRC index has fallen by $12/t this month, reaching $479/t fob today.