Offers for commodity-grade November-shipment HRC from Northern European producers have been heard at $950-970 per tonne cfr Turkish ports.
This is substantially lower than domestic prices in Europe, but not low enough to stimulate Turkish buying.
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Market sources estimated freight rates from Turkey to the European Union at about $30 per tonne, and freight from the EU to Turkey should be similar, Fastmarkets understands.
The situation is unusual because traditionally Turkey is a major exporter of HRC to Europe, market participants said. European steelmakers mainly sell coil products with higher added value to Turkey, so offers for commodity grades with relatively short lead times are unusual, according to sources.
“I heard HRC offers from Tata Steel at $970 per tonne cfr Turkey. The price is impossible because local HRC is at $900-920 per tonne ex-works now,” a Turkish source said.
“I am not sure which month production Europe is offering because the price is not reasonable at all. But it is interesting that Europe, which is Turkey’s biggest export market for HRC, is now trying to sell to Turkey. This will put Turkish exporters at bigger risk,” the source added.
“These low export offers are almost unprecedented. This indicates that European mills are hungry for orders. It seems that we went from full order books in 2021 to really low export prices for November-shipment HRC in matter of few weeks,” an Italian trader said.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €1,053.75 ($1,234.95) per tonne on Friday September 24, down by €36.25 per tonne week on week and by €87.92 per tonne month on month.
The index was based on achievable price estimates and bids at €1,030-1,100 per tonne ex-works.
European producers stepped up export sales after the mood in the domestic market turned negative amid higher availability and declining demand.
Lower demand for steel from the automotive industry, largely caused by the global shortage of semiconductors, has contributed to bearish sentiment in the EU market and released additional volumes of flat steel to spot buyers, sources said.
Market participants now expect steel consumption in the European automotive sector to decline by 20-30%, they said.
But the impact of the reduced demand from car manufacturers will differ for European producers depending on their involvement with the industry. In addition, some Northern European mills have experienced substantial deliveries backlogs, so the reduced demand will have little impact on the supply increase, market sources said.
“Automotive companies are taking their time before they settle long-term contracts for HRC [with European suppliers] as they believe that prices will fall further. The mills, on the other hand, are rushing to finalize agreements before coil prices slide down further. As a result, spot buyers are avoiding making new deals and they can take a pause now due to good stocks. All this creates more volume in the European market, so the mills are trying to export to minimize damage from increased availability,” a Northern European distributor told Fastmarkets.
Over the past few weeks, European mills have made deals for HRC that were originally intended to be sold to the car industry at low prices, sources said.
Some sources said that producers in the north of Europe have been accepting prices of €1,020-1,040 per tonne ex-works for limited volumes of HRC with shorter lead times.
European spot buyers have mostly been taking a wait-and-see stance in anticipation of further price falls. In addition, market participants said most buyers already have sufficient stocks to last until the end of the year.
Turkish buyers have shown no interest in importing HRC from Europe because of uncompetitive offers.
“The offered prices are too high and it is for November shipping, so I do not expect European offers to affect the Turkish market at all. The chip shortage will result in further losses in many sectors, including steel,” a Turkish trader said.
Fastmarkets’ assessment of steel HRC, import, cfr main port Turkey was $855-880 per tonne on Friday, down by $15-20 per tonne week on week from $870-900 per tonne previously. The assessment was based on offers for coil originating from the Commonwealth of Independent States.
The corresponding assessment of steel hot-rolled coil, domestic, exw Turkey was $890-920 per tonne on the same day, down by $10 per tonne week on week from $900-300 per tonne.
Imports of HRC from Turkey into Europe totaled 834,804 tonnes in the first seven months of 2021. This compares with 1.77 million tonnes in 2020, 2.71 million tonnes in 2019, and 2.82 million tonnes in 2018, according to data released by European steel association Eurofer.
Meanwhile, European suppliers exported 448,065 tonnes of HRC to Turkey in the year to July, 1.18 million tonnes in 2020, 1.69 million tonnes per in 2019, and 1.07 million tonnes in 2018, according to Eurofer.
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European producers have been more active with export offers of hot-rolled coil to Turkey in the second half of September in an attempt to keep domestic supply volumes under control, sources told Fastmarkets.