EUROPE HRC WRAP: Market quiet on pandemic effects, sentiment largely bearish

Domestic prices for hot-rolled coil in Northern Europe were fairly stable last week due to falls in demand and production cuts caused by the Covid-19 pandemic.

Fastmarkets’ daily steel hot-rolled coil index, domestic, ex-works Northern Europe, was €473.00 ($526.65) per tonne on Friday March 27. This was up by €3 per tonne week on week from €470 per tonne on March 20.

The increase did not indicate a market recovery. Some mills stopped giving low offers at the beginning of last week and this was reflected in the index.

Friday’s index was calculated based on offer prices heard at €470-480 per tonne ex-works as well as “workable” prices estimated by market sources at €460-470 per tonne ex-works.

No new deals were heard in the market but steelmakers in the region continued to fulfil existing orders, market participants said.

Demand for flat steel has been injured by the massive productions stoppages among automotive producers across Europe.

To balance decreased demand and production, a number of European flat steel producers reduced output, and some of them have temporarily stopped equipment.

Despite the production cuts, sentiment in the market remained largely bearish and buyers expected transaction prices to drop when trading activity was able to resume.

Some sources, however, claimed that the production cuts would be enough to slow down the price decrease.

Import prices
Offers of imported HRC to Northern Europe decreased at the end of last week, adding negative pressure on domestic prices.

Russian HRC has been offered and traded in Northern Europe at €435 per tonne fca Antwerp. The price included a fixed anti-dumping duty of €17.60 per tonne.

Offers of similar material from India have been heard at €445 per tonne fca Antwerp.

This compared with offers reported at €460-465 per tonne cfr Antwerp at the beginning of the week.

Indian steelmakers, including JSW Steel and Sail, decreased production due to the lockdown ordered by Prime Minister Narendra Modi on March 24 to control the spread of the Covid-19 pandemic.

Indian suppliers were also expected to focus more on export markets due to the decline in domestic demand, according to market sources.

In addition, Fastmarkets’ weekly price assessment for steel hot-rolled coil, export, fob main port Turkey, was $440-450 per tonne on March 27, down from $480-490 per tonne on March 20. Turkey is a key overseas supplier of HRC to the EU.

In the middle of last week some Northern European steelmakers made attempts to compensate for the lack of domestic demand by offering to the export markets. Although the export prices were supported by the weaker euro against the US dollar, no deals were heard.

Offers of European HRC to Egypt were heard at $460-475 per tonne cfr. One Northern European steelmaker has been offering material to Turkey at $470 per tonne cfr, and French HRC was available in Greece at $465 per tonne cfr.

In the meantime, Italian producers have not been active in the export market due to “logistical problems,” according to market sources.

Earlier this month, Italian ship-owner associations Confitarma and Assarmatori said that Italian ports were at risk because vessels that had anchored in Italian ports had subsequently been denied access to ports in Turkey, Africa and other parts of the EU.

Southern Europe
Last week, the Italian government ordered the closure of all non-essential production operations in the country, including steelmaking, as part of its measures to battle the spread of the Covid-19 virus.

The Italian authorities decreed that all non-essential production must stop between March 23 and April 3, after a jump in the death toll from the virus.

Despite the order, the country’s flat steel producers – ArcelorMittal Italia, Arvedi and Marcegaglia – have continued to operate, according to market sources.

Italy now plans to extend the measures until mid-April, the sources said.

Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe, was unchanged at €435-445 per tonne on March 25.

Interest among Northern European buyers in HRC from Italy has been limited due to the strict measures being applied at Italian borders, according to market sources.

Some of these sources believed that buyers would be more focused on sourcing materials from within their domestic regions.