Leading European steelmaker ArcelorMittal has increased its hot-rolled coil offer to €610/t for fourth-quarter deliveries, market sources told Argus today.
The company recently moved to €590/t and has implemented another rise after realising its headline target for October deliveries. It has also hiked its target in Iberia and Italy to €590/t.
The derivatives market has been pricing in a strong increase for weeks, and the CME's north EU HRC curve remains firmly in contango. December was trading at €608/t today, while September was in a €580-583/t range and November at €602/t — all at a significant premium to the spot market. On screen, August traded down to €542/t today, before rebounding to €565/t on talk of higher physical deals.
Until recently, most domestic mills have been selling at lower prices to fill their spotty summer rolling programmes, with buyers only placing when absolutely necessary because of subdued real demand and increasing economic and geopolitical uncertainty. As a result, the average value of northwest EU HRC deals captured by Argus in June was €533/t, down from €564/t in June and €597/t in May. Some suggest they can still access such lower prices from certain producers.
But two large EU mills reported securing higher spot prices today, at €570-590/t, and said there were substantial transactions at such levels. Sell-side sources expect the market to pick up after the summer holidays, as the window for third-country opportunities decreases with anticipated stronger curbs on imports. There is widespread expectation that a tighter safeguard will be implemented from January, after major member states supported industry asociation Eurofer's proposal.
Import prices have risen recently, following increases in Chinese export values. Argus' twice weekly cif Italy HRC assessment was €507.50/t on 1 August, up from a low of €470/t in mid-July.
There is also increasing talk about the carbon border adjustment mechanism (CBAM) benchmark being 1.3-1.4t for imported blast furnace coil — this would add a significant cost to imports with a carbon content of 2t or more. At the same time, some suggest German demand could firm after a 15pc tariff deal was reached with the US and given increased spending in the country.
