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European Hot-Rolled Coil Market Faces Downward Pressure Amid Oversupply and Weak Demand

The European hot-rolled coil (HRC) market is currently experiencing significant bearish pressure due to a combination of weak demand and oversupply. Market sentiments on April 4th revealed that prices remained stable in Northwest Europe, despite a notable drop of €25 per metric ton (mt) just a day earlier. This drop has been attributed to the mills’ aggressive strategies to secure orders for May, showcasing their willingness to lower prices amidst difficulty filling order books. Service centers in Germany expressed the need for mills to have reduced production rather than just dropping prices to avoid a potential price collapse.

Despite the challenges, market participants are anticipating that domestic HRC prices could bottom out at around €600/mt ex-works by the end of April. Currently, Platts has assessed domestic prices in Northwest Europe to be stable at €640/mt ex-works Ruhr on April 4th, with trade values reported between €630-640/mt ex-works Ruhr and offers from integrated mills ranging from €650-670/mt ex-works Ruhr. For South Europe, however, Platts recorded a decrease in domestic prices by €15/mt to €620/mt ex-works Italy, based on tradable values heard at €615-625/mt ex-works Italy.

Conversely, as reported by Fastmarkets on April 5th, the overall pace of HRC price declines across Europe has slowed down, though the market remains quiet. The trading activity is minimal as buyers continue to delay restocking, purchasing only small quantities of HRC to meet immediate needs. The lack of clarity regarding future price trends and subdued demand from end-user sectors are cited as contributing factors to the restrained spot market activity.

In Northern Europe, offers from integrated mills were quoted at €660-685/mt ex-works, but the higher end of this spectrum is seen as unfeasible by buyers. Achievable prices in this region are estimated by buyers to be in the range of €650-660/mt ex-works, with spot market transactions mainly involving small tonnages.

Fastmarkets’ daily steel HRC index reflected a marginal decline, pegging the domestic ex-works Northern Europe price at €660.21/mt, a slight decrease from the previous day and showing a downtrend both weekly and monthly. This slowing of price declines suggests the possibility that mills might consider production cuts as an alternative to further price reductions. Industry observers are looking to the upcoming Tube and Wire trade fair in Dusseldorf for potential announcements regarding output adjustments.

In Southern Europe, a similar trend was observed, with the HRC index dropping to €636.67/mt ex-works Italy. The market remains stagnant with no significant restocking, and buyers assess achievable prices to be around €630-640/mt ex-works. There’s speculation that HRC prices might stabilize at approximately €620-630/mt delivered.

Imports of HRC have been sporadic, with offers from Vietnam to Southern Europe around €570-580/mt CFR for June shipment and Turkish suppliers offering HRC to Italy at €600/mt CFR, including anti-dumping duty. However, no new bookings have been confirmed as buyers wait to assess the volume of HRC cleared by EU customs.

Complicating the import situation, the EU’s import quota for “other countries” was filled just two days into the new quarter, indicating a strong influx of imports at the beginning of the period. India’s HRC quota is filling slower than expected, partly due to the ongoing Suez Canal shipping crisis, which has led to delays as shipments are rerouted via the Cape of Good Hope. Consequently, a substantial amount of HRC from India is currently en route to Europe.

In summary, the European HRC market is navigating through a phase of uncertainty and strategic decision-making, as it grapples with weak demand, oversupply, and the global complexities of trade and logistics.

By The Coal Trader, AI generated