EU HRC: Sellers delaying negotiations

Some sellers of hot-rolled coil (HRC) in Italy are postponing talks about orders until next week, as the market appears to be firming up.

The Argus daily Italian HRC index is up by €1.25/t to €443.75/t ex-works. The northwest European index is stable at €481.25/t ex-works.

Sentiment has improved this week on higher-priced import offers and lower import arrivals of late, with market participants now expecting that the momentum seen in January in the Italian market will now resume. The lunar new year in China and decreasing Turkish scrap prices dampened the mood at the end of last month and saw prices fall by around €10/t.

But after last week's rebound in Turkish scrap prices and the subsequent increase in HRC offers, amid sufficient sales in the domestic Turkish market, buyers report offers from Turkey at €470-490/t cif Italy.

In the first half of February, sales for large lots in special cases were concluded as low as under €440/t ex-works, but producers have been pushing for €450/t ex-works, and some expect a further €5-10/t increase amid healthier order books across Europe.

End-user demand remains questionable and some service centres are still unable to pass higher HRC costs on to their customers, but some were heard to have found export opportunities.

German service centres are mulling how much to increase hot-rolled sheet prices by for monthly March contracts, to partially reflect recent rises in coil replacement costs.

Some end-users are eager to lock in supply for the second quarter already, as they want to ensure continuing operations with more perception of tightness in the supply chain. Customers of service centres who sold short to their own buyers are now scrabbling for material, especially in Germany.

At the same time, some customers, such as profilers, are less eager to buy as they doubt the longevity of the recent uptick: the coronavirus and its impact on supply chains is still a concern, with some yellow goods producers and carmakers reducing working hours as they wait for key components from Asia.

Those customers that could afford to wait continued to do so, but buyers in need of material had to pay more. There was continued talk of Italian sales into Germany and the north, given the slight arbitrage. But the lack of cheap imports is emboldening Italian sellers somewhat, as is the recent spate of sales into the north.