EU HRC: Importer drops prices

Mills outside the EU refused to agree to discounts today, as uncertainty over global steel prices loomed, but escalating trade tensions between China and the US have seen one mill accept lower hot-rolled coil (HRC) bids.

Firm offers were heard at $495-500/t fob Turkey base to south Europe. These levels are probably netted back by removing extras, as most mills are not currently focused on commodity grade coil sales.

A Turkish seller today agreed to $490/t fob for smaller tonnages, base.

Two mills are now offering around €470/t cif Italy, not particularly attractive to buyers, given all the uncertainty. One mill in north Africa is delaying its release of new offers, but most expect it to slash its quotes.

A Turkish re-roller has secured bookings to Europe recently, mostly in the Mediterranean. It procures from European steelmakers that are offering into Turkey at €462-472/t cfr effective this week.

Buyers across Europe are unlikely to be ready to conclude significant bookings ahead of holiday periods in Turkey and Italy, especially given weakening Chinese prices amid US-China trade tensions. In addition, competitively priced imports remain out of reach for smaller buyers.

European mills are reportedly still working to increase prices in September, pressured by high costs and low prices, but the environment does not seem conducive at present.

The Argus daily Italian HRC index dipped by €2/t to €445.75/t ex-works today. The northwest Europe index is stable at €467.25/t ex-works.

Continued weak market conditions have changed the shape of the forward curve. Argus assessed the front-month August contract at €468, down by 50¢, while September slipped by $4 to $464 and October by $1 to $465/t.

Current weakness is removing appetite for September production and October deliveries, so a rollover may be the best outcome. But the results of the European Commission's safeguard review and potential production disruption at ArcelorMittal Italia could bolster pricing heading into the fourth quarter.