The situation in the European hot rolled coil (HRC) market has not changed much this week in terms of prices, as demand has remained weak given sufficient stocks, while the significant influx of imported HRC from the first days of October has been supporting the negative mood in the market. Besides, the safeguard quota for HRC originating from ‘other countries’ has been exhausted right after the start of the new quota period of October 1 to December 31.
Notably, in the first days of the fourth quarter the HRC quota for ‘other countries’ has been filled, with more that 1.04 million mt of HRC awaiting allocation, and consequently exceeding the quota for the October-December quarter by around 11.5 percent. Thus, according to sources, the market is keeping an eye on how much HRC will be left at ports, while importers face the choice of paying to keep the material at ports until January or of paying the quota duty. Meanwhile, some customers will have to pay a duty of around three percent.
Meanwhile, tradable HRC offers have been estimated at €610-630/mt ex-works, down by €5-10/mt week on week. In particular, offers from Italian mills have been reported at €615-625/mt ex-works, mainly the same as last week, but, according to sources, prices below €600/mt have been targeted by buyers. In northern Europe, most mills have been refraining from giving any firm offers, with the estimated tradable levels at €620-630/mt ex-works, down by €10/mt on the higher end of the range over the past week, though several bids have been voiced at €600/mt ex-works.
“Even though orders are very low, mills have kept rejecting lower bids given the cost factor,” a market insider told SteelOrbis, adding, “More production cuts are needed to create concerns over supply and to motivate buyers.”
At the same time, the lull in business activity in the import segment has continued this week, with reference prices reaching €585-635/mt CFR, versus €585-610/mt CFR last week. The lower end of the range corresponds to ex-Vietnam offers in Italy, though, according to several Spanish buyers, offers from Vietnam as well as from Japan and Taiwan have settled at €620/mt CFR. Meanwhile, most offers for ex-Asia HRC are still reported in Italy at €600-610/mt CFR level. Furthermore, offers for ex-Turkey HRC have been voiced at €635/mt CFR southern Europe, including duty. “Asian sellers probably need to accept levels of €570/mt CFR and even lower to collect orders,” an international trader said.