EUROPE HRC WRAP: New multi-year high for Northern EU domestic price

Domestic prices for steel hot-rolled coil increased substantially across Europe over the week to Friday March 26 while transaction prices in Northern Europe have reached a new multi-year high.

Following a rise in transaction prices, ArcelorMittal pushed its official offers for HRC to €900 ($1,061) per tonne ex-works, an increase of €50 per tonne over its previous offers in Northern Europe, and up by €80 per tonne from the previous offer prices in Italy.

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €835.00 per tonne on March 26, up by €35.62 per tonne week on week and by €97.00 per tonne month on month.

The index was also above the previous all-time-high of €800-830 per tonne, achieved in June 2008.

The calculation of Friday’s index was based on achievable prices heard at €830-850 per tonne ex-works and a transaction reported at €830-840 per tonne ex-works.

Fastmarkets calculated the corresponding daily steel HRC index, domestic, exw Italy, at €818.33 per tonne on March 26, up by €31.66 per tonne week on week.

The index was based on achievable prices estimated by market sources at €810-820 per tonne ex-works.

Market participants expected transaction prices to continue to rise, with some adding that €900 per tonne ex-works could be achieved in deals soon, supported by material shortages and low stocks at buyers.

European producers were reported to be sold out of HRC until August-October rolling, sources said. Others, however, said that some mills could still trade June-July production coil.

Most European flat steel producers have been holding back from making offers while they evaluated the volumes they would be able to offer to the spot market. But they would still be able to sell small lots of material at higher prices, market participants said.

In addition, Liberty Steel has been asking for payment upfront for flat steel products to secure cash flow, but buyers have been reluctant to take the risk of making such deals on concerns about the steelmaker’s financial situation.

Several sources said that the producer has been asking for early payment for material already rolled for customers that agreed deals earlier, contributing to the concerns among buyers about a material shortage.

On March 3, German financial watchdog Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) imposed a moratorium on Greensill Bank, which is the key funding facility for GFG Alliance, parent company of Liberty Steel. On March 8, Greensill Capital, the bank’s own parent company, filed for insolvency.

As a result, buyers that have lower stocks have been more concerned about getting volumes than about the higher prices, and they seem to be willing to pay more to secure tonnages, according to the sources.

The upbeat mood in the European coil market has also been supported by a lack of competitive import offers. European buyers have had no opportunity to diversify their purchases and buy sufficient coil volumes from overseas suppliers because of high prices and Europe’s anti-dumping and safeguard measures. The recent surge in seaborne freight rates has also made imports less competitive.

Fastmarkets’ weekly price assessment for steel HRC, import, cfr main port Southern Europe, was €780-820 per tonne on March 24, up by €40-50 per tonne from €740-770 per tonne a week earlier.

The assessment was based on the latest offers from India heard at €780 per tonne cfr, plus offers from Turkey heard in the range of €790-820 per tonne cfr and from Egypt reported at €815 per tonne cfr.

Market sources said that Indian suppliers have been able to offer the lowest prices, due to the low domestic prices in the country. European buyers, however, were cautious about purchasing.

They expected that the EU’s second-quarter safeguard quota for India would be exhausted fast because a big Italian buyer has booked more than 150,000 tonnes and the material will arrive next month, sources said.

The weekly price assessment for steel HRC, import, cfr main port Northern Europe, was €770-800 per tonne on March 24, up by €10-30 per tonne week on week from €760-770 per tonne. The assessment was based on achievable prices evaluated by market sources.