EU HRC: Northwest SSCs concerned about low stocks

Some service centres (SSCs) in northwest Europe have already realised their hot-rolled coil (HRC) inventories are too low amid brisker enquiry levels and the fact that mills are delaying deliveries.

One service centre in the Benelux region has been informed that material meant to be arriving in January will actually be delivered in February. Given this, and some increase in demand, the service centre will need to buy more first quarter arrival material soon.

A leading European steelmaker is offering €460-470/t ex-works base in the northwest, despite announcing that it would be quoting around €450/t before the Christmas break. There is an expectation that mills which are well-booked for the first quarter could target firmer prices for April-June. But domestic sellers are still eager to learn how hungry their counterparts are for supply after the savage competition that drove down prices last year.

Argus' daily northwest Europe HRC index edged up by €0.50/t today to €440/t ex-works.

Half-yearly contracts have mainly been settled around €450/t base for HRC, with some done slightly above or below depending on mill and customer. Service centres took quarterly deals around €440-450/t, while a few annual deals were done closer to €470/t ex-works.

Automotive suppliers expect to see a slight increase in their coil purchases this year given the lower stock position compared with 2019. But there is not yet a sign of firmer real steel demand in the automotive market, mill sources said.

In the Italian market, participants have returned from holiday to be greeted by long-anticipated news that ArcelorMittal will be able to continue operating blast furnace 2 at Taranto. This could ease concern over supply, but also reduce import penetration.

Over the final months of 2019, some buyers committed to tonnages from imports as they deemed purchasing from Ilva riskier, with the mill unable to guarantee delivery times.

The Argus daily Italian index also rose by €0.50/t today, to €429.75/t ex-works.

Import offers and raw materials were firm. One Turkish steelmaker offered 2,000t at $510/t fob, but this was significantly above the buyer's price idea and they did not counterbid. Some traders see $500/t cfr workable for the Italian market. Another offer was heard at $520/t fob today, and larger tonnage material was offered at $505/t fob, while there is chatter that a mill sold at $490/t fob over the holidays.