EUROPE HRC WRAP: Limited availability, long lead times drive domestic prices up

Domestic prices for steel hot-rolled coil increased in Northern Europe in the week to Friday November 6, due to good order books at European mills amid long lead times and limited offers for imported coil.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €512.53 ($608.52) per tonne on Friday, up by €7.53 per tonne week on week and by €16.07 per tonne month on month.

Friday’s index was based on deals heard at €510-520 per tonne ex-works, with achievable prices heard at the same level.

The region’s steelmakers have been offering HRC at €530-550 per tonne, but this range was not included in the index because no deals were confirmed.

Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe, was €480-500 per tonne on November 4, compared with €480-490 per tonne a week earlier.

Italian producers were offering HRC at €500-510 per tonne ex-works, with deals heard at €480-500 per tonne ex-works.

Offers of the material in Spain were heard at €500-520 per tonne ex-works.

Bullish sentiment in the European coil market was supported by good order books at domestic mills, a recovery in international prices and the lack of competitive import offers, market sources said.

Northern European mills have been offering February-March shipment HRC and, therefore, were in no hurry to give any discounts to secure deals. Southern European producers, in the meantime, have been offering February-rolling coil.

Buyers, having no import alternatives at lower prices or that would be shipped earlier, preferred to make bookings with domestic mills.

Tight supply was supported by the fact that steelmaking equipment that was restarted in September has not begun to operate at normal capacity yet, and any additional volumes were being redirected to long-term buyers, mainly in the automotive sector, instead of to the spot market, according to sources.

Market participants also believed that the producers would keep production rates under control to sustain any price rise.

Market sources also said that demand from the carmaking sector has been strong over the past month, partly due to a backlog of demand that arose from the low activity during earlier lockdowns, and partly to a quick business recovery from Covid-19.

Demand for HRC imported from Turkey has also been limited in Northern Europe by expectations of preliminary measures and a possible start to registration of HRC imports into Europe from the Middle Eastern country.

Buyers in the south of Europe, in the meantime, have been showing good demand for Turkish HRC, market sources said.

Italian buyers traditionally rely more on imported HRC. This, combined with reduced output from an integrated producer in the south of the country, resulted in strong demand for overseas coil.

The European Commission was likely to settle anti-dumping duties for HRC from Turkey at 3-7%, according to market sources. Taking into the account the reduced domestic supply in Italy, buyers decided to take a risk and make deals with Turkish suppliers.

One of the Turkish producers made deals with buyers in Europe at $570-575 per tonne fob, the equivalent of €504-509 per tonne cfr, taking into account a freight rate of $20 per tonne.