UK HRC: Impasse growing as import offers soar

The UK hot-rolled coil (HRC) market seems increasingly nervous this week, as steep import offers are massively at odds with expectations from buyers awash with stock.

Argus' weekly domestic UK HRC assessment nudged up £5/t to £492.50/t ddp West Midlands today on the back of firming prices, but also reflecting the developing standoff with buyers reticent to pay increasing levels.

Offers are as high as £520-525/t ddp West Midlands for Turkish HRC for June arrival. Some traders are trying to achieve £515/t ddp for their stocked coil. But Turkish scrap import costs have started to slip after the recent run-up and iron ore has not risen to the extent people expected after lunar new year. Argus' ICX 62pc fines index slipped from $90.75/dry metric tonne (dmt) at the start of this week to $87.55/dmt. As a result buyers are sitting on their hands trying to wait out the bull-run.

One domestic seller is still taking March orders at old prices despite making noises about increases. The company is typically aggressive to move stock ahead of its financial year-end, according to sources.

Service centres are sitting on sufficient inventory and able to buy from traders with comparative ease, thus do not believe the rises will hold. As a result some are competing for cut sheet business as low as £520/t ddp, essentially at parity to forward offers: with sheet at such levels it is unlikely buyers will want to lift Turkish offers. The sheet prices make little sense given current coil stock costs, although they are more workable against Turkish pricing that got as low as £460/t ddp at the nadir of the market, though this material is not in the system yet.

Vietnamese cold-reduced coil has been offered as low as £535/t ddp, albeit on a very long lead time. And a trader's counterbid for galvanised coil was very quickly responded to by a Chinese mill substantially below its initial offer.