EU HRC: Auto slowdown spills over

The Argus northwest EU hot-rolled coil (HRC) index fell to €477.50/t today, down by €0.75/t from yesterday. The discount for Italian material widened to €7.50/t from €6/t.

Low demand is pressuring spot prices in Europe, as northern mills discount offers to fill their order books. Expectations of third-quarter increases are becoming uncertain, as sluggishness in the automotive sector is seeping into lower forecasts for July-December sales in white goods, heavy manufacturing and other steel-consuming industries.

Increased competition in Italy from northwest producers is causing prices in the region to fall, with sellers offering to the country at €490-500/t delivered amid a lack of demand in a weak German market. Similar and lower offers to Germany are emerging from Italian sellers and eastern mills at €480-500/t delivered, although such prices are not yet available to most buyers.

Some market participants expect that reduced import bookings over the past month coupled with extended European maintenance and production cuts will tighten supply, supporting HRC prices.

More stringent output reductions in southern Europe are driving importers to be more active there than elsewhere in the continent. A Turkish mill was today confirmed to have offered at $550/t cfr southern Europe. Sales from India and Russia are understood to have taken place at €470-485/t cif to both the north and south of Europe.