This week has continued to be weak in terms of hot rolled coil (HRC) demand and consequently pricing in Europe, with some producers announcing production cuts to balance oversupply in the region, and somehow to motivate buying activity for the first quarter of 2024. In the import segment, the lull in trade has continued, with most suppliers waiting for negotiations for January shipment.
Specifically, tradable HRC offers have been estimated at €620-640 ex-works in northern Europe, down by €10/mt week on week, while achievable prices in Italy have been voiced at €615-625 ex-works, versus €620-630/mt ex-works last week. At the same time, according to sources, European buyers’ bids have been reported at as low as €600-610/mt ex-works, with some at even €590/mt, which is considered as “impossible to accept by any seller” given the increase in production costs on the back of higher electricity tariffs and raw material prices.
In the meantime, this week, mills across Europe, including ArcelorMittal in Germany and Belgium, have announced production cuts in an attempt to lower production costs amid the ongoing weakness in the flat steel market. Apart from ArcelorMittal, more producers mainly in northern and central Europe have kept their production facilities idle since summer. “In order to see a real effect and to really motivate buyers there should be quite a massive output reduction in the region, because the gap between demand and supply is huge,” a market insider told SteelOrbis.
As for the import sector, it has continued to be mainly silent given safeguard-related risks and the smaller gap with local material prices. Indications for import offers have been estimated at €590-610/mt CFR, versus €610-635/mt CFR last week. Meanwhile, most suppliers who sell under quota have been out of the European market this week. “The big question mark is how much stock is sitting at ports for Monday, and how much will be left for the first quarter of 2024,” a Spanish trader said.