EU HRC: Some signs of stabilisation

The European hot-rolled coil (HRC) market may be close to reaching a bottom, with buyers returning to look for first-quarter tonnages.

Some traders are receiving more bookings from customers who are increasingly concerned about tighter availability once the European Commission imposes definitive safeguards — which are widely believed to have a country-by-country element for some products.

Problems with Rhine water levels are raising costs for German mills that are having to rely on railroad, trucks or partially filled barges, which means they could be more steadfast in their price expectations for the first quarter. Other mills are resolutely trying to defend the €540-550/t ex-works level.

Automotive companies have realised that they will not get the significant €60-80/t discounts they originally sought. Some mills have agreed to rollovers, while larger steelmakers are holding out for increases, citing higher raw material costs.

There are rumours that the US section 232 tariffs on steel and aluminium imported from Turkey will be reduced to the original 25pc, lessening price pressure in Europe.

But the rout in global steel prices is clearly concerning northwest European participants. One Benelux-based mill that had been hoping for a slight increase in first-quarter contract prices to €550-570/t ex-works has resolved itself to accepting a slight reduction, to €540-550/t.

The Italian market has been hit hard by competitive imports from Turkey and Asia, as well as by wider macroeconomic concerns. As a result Italian HRC, which is as low as €480/t ex-works domestically, has been heard selling into northern Europe at around €510/t delivered, or slightly lower.

One mill with exposure to Volkswagen has been more prominent in the spot market and sold at aggressive levels, particularly into Benelux. And another seller has tried to finalise deals at around €540/t delivered Germany.

Competition between service centres is also dampening price expectations. Mill-tied distributors are selling cut sheet at €580-585/t delivered customer, which would represent a loss based on replacement costs.

The daily Argus northwest Europe HRC index slipped by €0.25/t to €534.25/t ex-works today.

Summary of market activity heard by Argus

HRC-EU: Seller estimates tradeable value at €535/t ex-works

HRC-EU: Seller estimates tradeable value at €545/t ex-works

HRC-EU: Seller targeting €540/t delivered Ruhr

HRC-EU: Buyer estimates tradeable value at €540/t ex-works

HRC-EU: Trader estimates tradeable value at €510/t ex-works

HRC-EU: Exporter into EU estimates tradeable value at €520/t ex-works

HRC-EU: Southern material heard transacted at €510/t delivered Benelux

HRC-EU: Turkish material offered into southern Europe at €470/t cfr

HRC-EU: Buyers bidding €470/t ex-works in Italy

CRC-EU: Turkish material offered into Italy at €570/t cfr