EU HRC: Demand dampened further by holiday

The northwest European hot-rolled coil (HRC) market was quiet today as a result of the Easter holiday and continued demand weakness.

Argus' northwest Europe HRC index nudged €1.75/t lower to €487.25/t ex-works. The discount for Italian material relative to northwest EU was €30/t, up €0.25/t from Thursday.

Europe is ostensibly the cheapest market in the world, hence increased appetite from regions such as north Africa and Turkey. Mills are also keener to export because of the weak domestic market, and traders selling into the EU are finding it extremely difficult to move tonnes unless they are dealing in special products.

Demand was poor, and wider macroeconomic uncertainty meant buyers remained hesitant. Some sellers alluded to increased inquiry levels for hot-dip galvanised coil, perhaps as a result of the other countries quota for non-passivated automotive gauge material exhausting earlier this month. The April-June other countries or residual quota of 76,707t was exhausted on 4 April.

Some hope automotive demand will increase in the second half of the year as the destocking that has occurred so far this year draws to a close. One sub-supplier to the auto sector said its volume was 20pc below budget.

Demand from the construction sector has also started to ebb in Europe, but most attribute this to apparent buying rather than real demand, with buyers holding out for lower prices.

Distributors continue to destock in the anticipation of buying cheaper material and thus alleviating margin pressure. But the holiday has reduced the number of working days and further bitten into demand levels.

Import offers remain uncompetitive to domestic material available on shorter lead times. An Asian mill offered HRC into Antwerp just below €500/t cfr, but this is unattractive. A trader said €475/t cfr levels were even struggling to entice buyers.