Domestic prices for Europe increased further HRC over the week to Friday August 14, despite seasonally slow market activity.
Buyers told Fastmarkets they expect prices to continue the recovery in September when market activity improves after the summer slowdown.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe was calculated at €۴۱۹٫۱۷ ($۴۹۶٫۳۲) per tonne on August 14, up by €۵٫۷۱ per tonne week on week and up by €۱۶٫۱۷ per tonne month on month.
*** EUROPE HRC WRAP
Friday’s index was based on the latest deals heard, at €۴۱۵-۴۳۰ per tonne ex-works, and “workable” prices reported at €۴۱۵-۴۲۰ per tonne ex-works.
Official offers from Northern European mills were heard at €۴۴۰-۴۶۰ per tonne ex-works, but these were not included in the index after buyers deemed them “unworkable.” The high offers show that steel mills will insist on higher prices for HRC as soon as market activity recovers in late August-early September, sources told Fastmarkets.
***Southern Europe
In Southern Europe, Italian steelmakers and buyers have been largely inactive due to the summer slowdown and scheduled maintenances at mills. Sources said that achievable prices were around €۴۰۰-۴۱۰ per tonne and expect producers to increase their offers in September.
As a result, Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe, was €۴۰۰-۴۱۰ per tonne on Wednesday August 12, compared with €۳۹۰-۴۱۰ per tonne on August 5, based on “workable” prices, deals and offers heard in the market.
Domestic prices for HRC have been gradually rising in recent weeks, supported by reduced buyer interest in imported material and in expectations of a boost to demand after the summer slowdown.
*** European buyers
European buyers have considered import offers to be too high for some time, with prices in non-European Union markets recovering more quickly, leading to a reduction in viable offers.
For example, Turkish steelmakers, the main overseas suppliers of HRC to the EU, increased their export prices again last week.
Fastmarkets’ weekly price assessment for steel hot-rolled coil export, fob main port Turkey was $500-505 per tonne on August 14, up from $490-500 per tonne on August 7.
Taking into the account average freight rate heard in the market of $20-25 per tonne, the price to European buyers would be the equivalent to €۴۴۰-۴۴۷ per tonne cfr European ports, which is higher then the offer prices from domestic suppliers.
***Turkish mills and quotas
In addition, Turkish mills have been more cautious with their offers to the EU after the start of an anti-dumping case against them.
Importing HRC has become more risky, market sources said, after the European Commission replaced yearly quotas with quarterly country-specific quotas from July 1 this year.
These changes will force buyers to source more material from the European steelmakers, market sources believe.
***demand for Europe HRC during the Covid-19 lockdown
A number of European producers have stopped some equipment or cut capacity in response to the drop in demand during the Covid-19 lockdown, however, and restarting the equipment is likely to take a few months, thereby supporting the domestic prices.
Trading sources expect demand to recover in September, but do not expect it to reach the same level it was before Europe introduced Covid-19 lockdown restrictions.
Some market participants doubt that the recovery will be strong enough to support any sustainable price rises, however. Particularly if the demand recovery is not strong enough to allow steelmakers to have sufficient order books and they have to give discounts to encourage sales, market sources said.
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