Prices of steel hot-rolled coil in Europe continued to decrease on Monday April 8 amid persistently slow demand and bearish expectations among buyers, sources told Fastmarkets.
Offers from integrated mills in Northern Europe for HRC with May-June lead times were heard in the range of €650-660 ($704-715) per tonne ex-works on Monday.
This was in sharp contrast with offers reported in early March at €720-730 per tonne ex-works.
But the lower prices failed to spur buying and trading remained very slow. Sources told Fastmarkets that demand from key steel-using sectors has dropped by around 15-20% year on year and this has affected purchases.
Trading was also limited by buyers’ expectations that the rock bottom for HRC prices has not yet been reached, while producers resisted further price drops citing high input costs.
“Mills claim that current [HRC] prices are already at cost-line for them and everyone sees that reducing the price doesn’t have any effect on the market – trading remains weak,” a buyer in Germany told Fastmarkets.
“Next week [at the Tube and Wire trade fair on April 15-19] in Dusseldorf, we might see some restocking, but prices are unlikely to rebound unless mills announce output cuts. And even in this case, effects on the [HRC] market will not be immediate,” a second buyer said.
Industry sources estimated tradeable market levels in the range of €640-660 per tonne ex-works, depending on tonnage.
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €651.25 ($705.64) per tonne on Monday, down by €5.83 per tonne from €657.08 per tonne on Friday.
The index was down by €12.50 per tonne week on week and by €53.00 per tonne month on month.
Fastmarkets calculated the corresponding daily steel HRC index domestic, exw Italy at €635.00 per tonne on Monday, down by €0.83 per tonne from €635.83 per tonne on Friday.
The index was down by €10 per tonne week on week and by €43.75 per tonne month on month.
HRC offers in Italy were mainly heard at €650-660 per tonne delivered, which is equivalent to €640-650 per tonne ex-works.
Fastmarkets’ sources estimated tradeable market levels in the range of €630-640 per tonne ex-works, but trading remained very limited.
“It is not a question of price – it is a question of [end-user] demand. Demand remains very, very limited and most buyers can live on hand-to-mouth [HRC] bookings,” a trading source in Europe said.
Import offers of HRC from Asian producers to Italy were heard at €560-580 per tonne CFR. According to a buyer source, even lower levels by €5-10 per tonne can be negotiated for potential deals.
But customers remained reluctant to buy due to the overall downtrend with HRC prices, the buyer source added.
Another reason for the postponed signing of import contracts was the lack of clarity with the allocation of the import quotas for the second quarter of the year.
Published by: Julia Bolotova, Darina Kahramanova
Source: Fastmarkets
