EU HRC: Market waiting for iron ore clarity

The northwest European hot-rolled coil (HRC) market is at a standstill, with participants waiting to gauge the full effect of Vale's production cuts in Brazil on iron ore prices. But the general expectation is that HRC prices will come up slightly as a result.

The Argus daily assessment for northwest European HRC is unchanged today at €505.25/t ex-works. Argus assessed the ex-works Italy HRC differential to the ex-works northwest European price at minus €30.25/t.

But rising iron ore prices may not be enough to support the higher HRC prices that mills have been seeking. With buyers' stocks reportedly at "acceptable levels", and relatively short lead times from mills, sellers could struggle to achieve the €30/t increase they had targeted since the end of January-beginning of February. Some producers have second-half March availability, according to a mill executive.

That said, pressure from imported material to the north is alleviating, with import offers from Turkey increasing, and Italian prices moving up. A producer in Italy is offering at the equivalent of €480/t ex-works to northern Europe, according to a buyer.

Latest imports to northwest Europe were concluded at €475/t cfr Antwerp, a source said, but Turkish market participants said mills were targeting above this level this week. Market participants in Europe questioned if €500 cfr Antwerp or Italy was achievable, saying Italian levels are more competitive.