EU HRC: China spike affects sentiment

The increase in Chinese hot-rolled coil (HRC) offers today, coupled with the rising prices across Turkey and Russia over the past few weeks are continuing to affect sentiment in Europe, but slack demand is dampening any substantial rises.

The Argus daily assessment for northwest European HRC edged up today by €0.75/t to €506/t ex-works. Argus assessed the ex-works Italy HRC differential to the ex-works northwest European price at minus €31/t.

Mills in Europe are yet to achieve the recently announced price increases, despite rising costs.

Disruption to pellet supply in Tubarao, Brazil, is a real concern for EU mills given such direct-charge material currently comprises a big portion of their blast furnace charge.

But steel demand is sluggish and concern remains over the health of the automotive sector.

Some are waiting to see whether mills or buyers will "blink" first. If mills need to finalise March rollings they may have to compromise on their expectations, as the buy-side appears sanguine in the face of firmer offers.

Italian demand is even more subdued, despite import offers rising over the past two weeks, rendering Turkish mills uncompetitive, according to several sources. But others suggest mills are succeeding in their €20-40/t rises across products. The weakness of the euro against the dollar is not in the buyers' favour, with some reportedly considering importing steel products instead of HRC.

Summary of market activity heard by Argus

• HRC, EU: Tradable value at €515/t ex-works northwest Europe, according to trader
• HRC, EU: Tradable value at €500/t ex-works northwest Europe, according to mill source
• HRC, EU: Tradable value at €510/t ex-works northwest Europe, according to mill source
• HRC, EU: Offers at €525/t ex-works northwest Europe, according to trader
• HRC, EU: Tradable value at €510/t ex-works Italy, according to trader
• HRC, EU: Tradable value at €460/t ex-works Italy, according to buyer