EU HRC: More mill offer increases expected

More European mills are likely to announce offer increases in the coming days, with some already planning to table higher offers.

This follows a €50/t ($55.70/t) rise on December list prices announced by ArcelorMittal on 10 January, as reported first by Argus. This took its offer to €480/t ex-works in southern Europe and €500/t ex-works in the north.

The Argus daily Italian index increased by €3/t to €435/t ex-works today, while the northwest EU index nudged up by €0.50/t to €441.50/t ex-works. This took the northwest EU monthly average to €440.25/t, while the February and March forward contracts were assessed stable at €457.50/t and €465/t.

Other mills are expected to be less aggressive than ArcelorMittal, with many questioning the comparatively high level of its offer given muted demand. But most agree that the move will facilitate increases, helped by continuing strength in import offers and brisker apparent demand.

Many sources suggest that Italian domestic hot-rolled coil (HRC) could rise to a high of €460/t ex-works in the first quarter.

One mill offered at €480/t delivered today with no guarantee of delivery date, while material from other producers was still available at €430-440/t ex-works.

Lead times are around one month in Italy, but at least two mills still had January rolling available late last week, likely because of the December holiday period.

Transactions in Italy have been slow so far this year, but more business is expected in the next 10 days as buyers need to place. The sluggishness in sheet outsell prices from service centres to consumers means that some buyers do not believe increases will stick.

But some northern European service centres have noticed an uptick in activity from certain sectors, and firmer sales in the last week. Some returned from the Christmas break feeling inventories were too low, but have been able to place at around €440/t ex-works in the last few days despite 10 January's increase.

Lead times have already pushed out in the north, with most large mills booked until March. But at least one tier-two supplier still has not even started selling February production, having announced €15-20/t increases just before Christmas. The mill had been offering into Germany at around €470-480/t delivered.

Imports remain unattractive for most, with Turkish and Indian HRC on offer last week at €480-490/t cfr European ports. This provides domestic mills leverage to close the gap with third-country material. Russian coil remains notable by its absence.

Brazilian cold-rolled coil has been offered into southern Europe at €535-550/t cfr, depending on trader.