EUROPE HRC WRAP: Domestic prices rise on more demand, less output, lack of imports

Domestic prices for steel hot-rolled coil across Europe increased further over the week to Friday August 28, supported by high import prices, reduced production from domestic mills and seasonal demand recovery.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was calculated at €450.45 ($537.09) per tonne on Friday August 28, up by €16.70 per tonne week on week and by €40.45 per tonne month on month.

Friday’s index was based on a deal heard at €450 per tonne and achievable prices reported at €450-460 per tonne.

The region’s steelmakers have been offering HRC at €500 per tonne, but these were not included in the index because buyers deemed the price unworkable.

The corresponding weekly price assessment for steel HRC, domestic, exw Southern Europe, was €430-440 per tonne on August 26, up by €30 per tonne week on week from €400-410 per tonne.

This assessment was also based on workable prices heard in the market, while official offers were heard at €460-470 per tonne ex-works.

The high offers, however, showed that steel mills will insist on higher prices for HRC as soon as market activity recovers – which was likely to be in late August or early September, sources told Fastmarkets. Some market participants believed that the target prices could be reached in a couple of months if market conditions did not change.

Northern European producers were sticking to a similar pricing policy, targeting further price increases. Steelmakers needed to achieve these to balance high raw material costs and to compensate for losses in the second quarter of the year that resulted from the effects on consumption of Covid-19 lockdown measures, market sources said.

Fastmarkets’ daily index for iron ore 62% Fe fines, cfr Qingdao, rose to $124.37 per tonne on August 28, up by $17.71 per tonne month on month.

A combination of a lack of competitive import offers, reduced supply from domestic mills and some seasonal demand recovery in late August-September supported the domestic price recovery.

Buyers in Northern Europe have shown little interest in imported HRC material due to high prices and long lead times, while buyers in the South have made some deals in recent weeks because of a need to re-stock and amid scheduled maintenance at Italian mills.

Limited offers of imported HRC available in the Northern European market were reported to be too high, with offers of HRC from Russia heard at €465 per tonne fca Antwerp.

Meanwhile, Turkish producers were offering material at $520-530 per tonne fob and one deal was made to Italy during the week at $520 per tonne fob for 20,000 tonnes. The average freight rate to Italy is $25 per tonne, market sources said.

Market participants in Italy booked another Turkish HRC cargo at $510 per tonne fob late last week, sources told Fastmarkets.

Demand has started to return after a lull earlier this month, but it was unlikely to reach pre-Covid-19-lockdown levels, market sources said. The lack of a demand recovery might slow the price rise, however, some participants said.

But the automotive industry has been more active than market sources expected when purchasing flat steel, which supported the price recovery, sources told Fastmarkets.

Steelmakers restart capacities
European steelmakers have begun to restart production of the capacities idled during Covid-19-related lockdowns.

Liberty Steel restarted blast furnace (BF) No2 at its plant in Ostrava in the Czech Republic on August 28, and planned to gradually ramp-up production to adapt to market demand, a company spokesperson told Fastmarkets.

ArcelorMittal has restarted BF No3 at its Dunkirk flat steel plant in France, where equipment had been idled since March 23 this year.

Austrian steelmaking group Voestalpine planned to resume operations from a small BF at Linz in Austria.

Steel processor Wuppermann has extended its hot-dipped galvanized coil capacity by upgrading its plant in Gyor-Gönyu, Hungary, by around 50%.

And Novolipietsk Steel (NLMK) has started the pre-assembly of three new finishing mill stands for the upgrade of the hot strip mill at its La Louvière plant in Belgium, which will result in an HRC capacity increase.