EUROPE HRC: Domestic prices down on lower imports, coronavirus uncertainty

Domestic prices for hot-rolled coil in Northern Europe have dropped day on day following a decline in import offers and the risks related to the 2019-nCoV coronavirus outbreak in Italy, sources told Fastmarkets on Tuesday March 10.

Fastmarkets’ daily steel hot-rolled coil index, domestic, ex-works Northern Europe, was €481.07 ($549.54) per tonne on Tuesday, down by €3.55 per tonne day on day from €484.62 per tonne on March 9.

The index was calculated based on average achievable prices heard at €480-485 per tonne ex-works. In addition, some buyers claimed that the steelmakers could give discounts for HRC and sell it at €465-475 per tonne ex-works.

Official offers from Northern European mills, however, were still being heard at €500-520 per tonne ex-works.

Domestic prices have been supported by good order books at the region’s steelmakers. They have offered waiting times for HRC shipments of as much as 13 weeks, market sources said.

Buying activity has slowed down this week due to risks related to the lockdown in Italy to combat the coronavirus outbreak and its potential effects on steel demand across Europe. But this was not enough to prevent the spread of negative sentiment in the market, due also to cheaper imports.

“[The market in] general is horribly quiet and I cannot imagine any positive developments as long as coronavirus is a problem,” a German distributor said.

Exchange rate fluctuations and the long lead time from domestic mills, however, were likely to make buyers turn to overseas HRC, according to market participants.

The euro has gained 2.46% against the dollar week-on-week, according to exchange rate service Oanda. It was trading at €1 to $1.142 on March 10, compared with €1 to $1.110 on March 3.

HRC from Turkey and Japan has been offered to Germany at €465-475 per tonne cfr Antwerp, down by about €10 per tonne week on week, but no deals have been heard so far.

Meanwhile, the market in Southern Europe has been slow due to concerns related to the lockdown announced for the whole of Italy.

Although goods and raw materials can be transported both within the country and across borders, and therefore steelmakers can operate as normal, market activity has slowed down due to a combination of the uncertainty among buyers and delivery issues faced by some companies.

Italian steelmakers have been trading HRC at €435-445 per tonne ex-works, down by €5 per tonne week on week. Official offers, however, have been heard at €450-460 per tonne ex-works.

In the meantime, offers of the material from Turkey have been heard at $510-520 per tonne cfr Italian ports.

A slowdown in deliveries of HRC from Italy to Germany might have a short-lived positive effect on domestic prices in the north of the EU, market sources said, due to there being less competition with Southern mills.

Julia Bolotova in Dnepr contributed to this story.

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