EU HRC: Mills get revenge on Turkey

The northwest European hot-rolled coil (HRC) market weakened a touch further today as mills continued to look to exports to rebuild battered orderbooks.

Argus' domestic northwest Europe HRC index slipped €1/t to €489/t ex-works. The discount for Italian material dropped to €29.75/t. While still weak, the Italian market appears to be showing more signs of stabilising than the north.

Italian material was heard offered at $515/t cfr Turkey, with European pricing — now the lowest in the global marketplace — weighing on the Turkish domestic market. This is quite a turnaround from last year, when ever-softening Turkish export offers hammered mainland European mills.

North African traders reported offers of $550/t cfr Egypt from mills in Germany and Holland, including those typically not so active in the commodity-grade export market. This was purely a symptom of EU market weakness, one big seller admitted.

Some mills were still hopeful a bottom was close. As destocking runs its course in the automotive supply chain, demand — down by around 10pc — will pick up as the slippage in buying from the sector actually outpaces the drop in registrations and production of recent months.

Mills need to achieve higher prices if they are to avoid an increasingly severe margin squeeze in the second half of the year.

Producers also hope import arrivals will slow headed into May and June, given that third-country offers have not really been competitive of late. Current import arrivals show no sign of dissipating, however, with the April-June HRC quota of over 2mn t looking like it will be fully utilised. Import arrivals over the first 16 days of April indicate it could be similar to the record month of January, when almost 1mn t of wide HRC was imported.