EU HRC: Taranto drama stokes Italian prices

Italian domestic hot-rolled coil (HRC) pricing continued to edge up today, with most mills out of the market and all eyes on the unfolding drama surrounding ArcelorMittal's Taranto plant.

There is growing acceptance in the market that ArcelorMittal will walk away from its deal to buy the plant, as a judge-mandated closure of blast furnace 2 — alongside all the other problems the plant has faced — means it cannot fulfil its industrial plan.

The company has refused a few iron ore cargoes, but some suggest this was a result of strike action at the plant. Most believe that ironmaking is likely to be over at Taranto if ArcelorMittal walks away — many local stakeholders are against the hot end of the facility given how it has polluted the area.

With ArcelorMittal not offering from Ilva — and another mill out of the market and eyeing higher prices on tighter availability and firming scrap costs — there is only really one supplier of base HRC material left. It has been offering at around €400/t ex-works base and has transacted at around €390/t, and at higher levels in some cases.

Argus' daily Italian HRC index rose by €3.25/t to €389.25/t ex-works today. The northwest European HRC index was static at €413.50/t ex-works, leaving the discount for Italian material at €24.25/t.

Imports into Italy are at a minimum of €400-410/t cif, with higher levels also offered. Egyptian material was offered into Italy and the Iberian peninsula at €420-430/t cif.

Unexpectedly, imports into Antwerp have been heard below this level, closer to €400-410/t cfr. Buyers in northern Europe are pressing for lower prices, but with little success. The euro-dollar exchange rate has also been making imported material less competitive.

There is an increasing belief from some in the north that prices have bottomed out, given the capacity cuts. ArcelorMittal said today that it would idle its Krakow blast furnace, as previously intended. But at least two mills still have availability for December at import-parity levels.