EU HRC: Prices slip during seasonal lull

The northwest European hot-rolled coil (HRC) market remains subdued today as the typical seasonal lull, concerns about underlying demand and competitive import offers weigh on pricing.

Argus' daily northwest Europe HRC index slipped €3/t to €527.5/t ex-works amid quiet trading.

The market is very quiet, with activity winding down ahead of the Christmas holiday, as is usually the case. But stockists are being encouraged to offload steel given concern about real demand levels, particularly in the automotive sector.

Imports are another challenge for domestic sellers. Turkey has doubled its import licences for March-April, suggesting more material will come from the country, which has consistently been the most competitive seller into the European market this year. Domestic mills have notified the European Commission.

Turkey is already on the commission's radar, given the large increase in its coil shipments this year. Turkish offers are heard at €460-470/t cfr into southern Europe, and closer to €480/t cfr into Antwerp.

Turkish traders said the slippage in imported scrap costs could filter into lower HRC offers going forward, with southern European buyers reducing their targeted prices.

Indian material was offered into Antwerp at $550/t cfr (€487/t), while Taiwanese offers are in line with Turkey. Central European pricing has also been under pressure after a €15/t contraction in Russian offers, which has seen some competitive CEE-origin offers into the north.

Taiwanese material has also been offered into the UK at competitive levels of £490/t (€545/t) ddp West Midlands, but appetite is weak as the lead time is into the middle of next year. Western European mill prices are closer to £500/t ddp.

Despite the negativity surrounding the automotive industry in recent months, one leading northwest European steelmaker secured €15/t increases in some annual supply contracts for 2019, according to one executive. The dip in demand was nothing too concerning given how strong buying had been, he said.

And there is an expectation among some that the market will snapback come February as demand re-emerges and the definitive safeguard kicks in, which will tighten up availability of hot dip galvanised and cold-rolled coil.