EU HRC: Sentiment worsens

Sentiment has deteriorated further in the European hot-rolled coil (HRC) market, with liquidity very low as few buyers need tonnes.

In Italy, large buyers were obtaining €850-860/t ex-works from local mills for February, at a rollover to January deals. Despite Italian mills' intention to raise last prices last month, they have resorted to just taking orders, after weak sheet prices dampened sentiment. Appetite in Germany was very low today, with an increasing stock overhang limiting purchasing appetite. Buyers are also much more relaxed about supply and in no rush to procure. In Italy, some expect to conclude business ahead of Christmas, while the northwest European market looks set to remain quiet. Many northwest European buyers are trying to release the tonnage they have from ports, rather than commit to new deals. Space is an increasing concern for service centres, with mills trying to force them to call off material when their stocks are already high.

A carmaker said semiconductor availability is loosening in the second quarter, but is not properly normalising and might not lead to an increase in automotive steel appetite in January-March. Some carmakers have been calling off more tonnes than necessary to fulfil their demand and are contemplating continuing to do this to reduce the amount of coil they need to buy under new higher-priced deals for 2022. As they believe semiconductor supply is unlikely to normalise until 2023, carmakers are prioritising production of higher-margin vehicles, which can contain aluminium rather than steel in the body-in-white. As a result, they are not bullish on their forecast steel demand.

In the north, one HRC and hot-dip galvanised producer was selling at around €920-930/t to Benelux-buyers, while Visegrad producers were still willing to sell January production at €900-920/t delivered Ruhr.

Argus' daily northwest EU HRC index slipped by €4.50/t today to €917.25/t, while the Italian index dropped by €4/t to €860.75/t ex-works.

Imported material today was heard available from Asia at €820-840/t cif, but some buyers are reporting much lower levels from nearer origins, even under €800/t. Market participants say these will be pre-duty, be it safeguard or dumping. Korean cold-rolled coil was heard at €990/t cfr Italy, while port stocks were being sold at €950-1,000/t ex-port.