Market sources expected that domestic prices for hot-rolled coil (HRC) in Europe will continue to decline due to persisting poor demand and mounting pressure from reductions in import offer prices, sources told Fastmarkets on Wednesday September 18.
Suppliers from Turkey and India have been active in the European market to compensate for the lack of buyer activity in their other traditional markets. Fastmarkets’ weekly price assessment for steel HRC, import, cfr main port Southern Europe, was €415-430 ($458-474) per tonne on September 18, down from €430-445 per tonne cfr a week earlier.
Offers of the material from Turkey and India have been heard at €420-430 per tonne cfr Italian ports, while bids have been heard at €410-415 per tonne cfr. A few deals have been heard at €420 per tonne cfr with buyers in Italy. In the meantime, the same suppliers have been offering HRC to Spain at €430-445 per tonne cfr.
*** Importers' efforts to avoid import tariffs
Fastmarkets’ weekly price assessment for steel HRC, import, cfr main port Northern Europe, was €425-435 per tonne on Wednesday, down from €430-450 per tonne cfr a week earlier. Turkish and Indian suppliers have been offering the material at €425-435 per tonne cfr Antwerp, Belgium. Demand for imports has been limited due to the generally low demand in Europe and to the fact that buyers believed that prices will decline further so the risks of buying material at the current prices were too high.
Some sources believed that a definitive decision in the EU’s safeguard case review might support domestic prices. The European Commission (EC) was scheduled to announce its decision by October 1 this year. Earlier this month, the EC approved proposed changes to the existing measures but the official announcement was expected by October 1. The changes will include a maximum limit of 30% of the overall market share to be permitted to each country that supplies HRC to Europe.
Because Turkey is the biggest supplier of HRC to the EU, buyers were concerned that, if they bought Turkish coil now, their purchases might exceed that 30% limit and become subject to an import tariff. The majority of sources, however, think that low demand across Europe will offset any positive effects from changes in the safeguard measures.
“Demand is low and stocks [at European distributors] are too high compared with current demand. So there are no signs of positive changes until the end of the year, and I do not think that the review in the safeguard case will bring any changes,” a German trader said. “Sentiment is gloomy, and we do not see any turning point for HRC prices,” a representative of an Italian mill said.
Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Northern Europe, was €460-465 per tonne on September 18, down from €465-475 per tonne ex-works last week. The assessment was based on offers and the few deals heard in the market. Northern European mills were likely to decrease their offers further because they need to fill their order books for the fourth quarter. Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe, was €430-450 per tonne on September 18, widening downward from €435-460 per tonne a week earlier.
*** The defining Italian market
Italian mills have been reported to be offering limited volumes of the material due to planned maintenance at an Italian electric-arc furnace (EAF) operator in November, and also to uncertainties related to an instruction from the Italian authorities to close one of the blast furnaces at ArcelorMittal Italia’s Taranto plant. ArcelorMittal Italia, formerly known as Ilva, received an order in July from the Taranto public prosecutor to shut down blast furnace No2 at its plant. The authorities’ demand was related to a fatal accident at the plant in 2015, before it was sold to ArcelorMittal.
Official offers of HRC from Italian mills have been heard at €440 per tonne ex-works, while the bids heard in the market were €410-430 per tonne ex-works. The upper end of the price assessment represented “workable” prices in Spain. Market sources believed that to stop the fall in domestic prices, European steelmakers will have to reduce their capacities. Two sources have said that some mills in the north have already cut their flat steel output.
Reference: Metal bulletin