Sentiment has improved in the past week in the EU hot rolled coil (HRC) market, while the range of domestic prices has increased slightly. Achievable spot prices are in the €870-950/mt range in the Italian market and at €1,000-1,050/mt in northern Europe, all ex-works, while they were at €870-900/mt and at €990-1,030/mt respectively last week. This was due to improved demand thanks to restocking activities by distributors, although activities have remained generally limited for now. Some optimism was also brought to the market by the news of an agreement between the EU and the US as regards the Section 232 steel tariffs, as European producers should be able to export their flat steel products to the US in the future, which would reduce domestic supply, thereby supporting local prices.
Meanwhile, as reported previously, steel giant ArcelorMittal is aiming to close long-term contracts at €1,080/mt for HRC and at €1,220/mt for HDG across Europe, which are higher than current spot prices. Buyers are trying to buy some time though as they want to gain more clarity as regards the market trend. However, sources told SteelOrbis this week that an Italian producer closed long-term contracts with a European automaker at base prices of €1,060/mt for HRC, €1,120/mt for CRC, and €1,160/mt for HDG.
As mentioned, activity in the spot market has remained generally weak, but market players expect demand to keep improving in the coming weeks due to restocking, which should support prices together with higher production and logistics costs. Only demand from the automotive industry is likely to remain slow, owing to the lack of semiconductors globally, but European mills hope to be able to compensate for this with exports to the US in the coming months.
Meanwhile, the general range of import offers has increased further compared to late October, from €800-840/mt CFR southern Europe to €850-900/mt (duties included) for HRC coming from various sources, including Turkey. However, most buyers are still not interested in import offers due to long delivery times and the risk of paying duties on volumes exceeding EU safeguard quotas. Nevertheless, as previously reported by SteelOrbis, Russian producer Severstal was able to close some deals for big coils at $980-1,000/mt FOB to northern Europe.