HRC domestic prices have decreased further in the EU market in the past two weeks, as for most of November activities remained generally limited since most spot buyers were postponing their purchases. As reported previously, local mills have been under pressure in the past few months since several buyers in the automotive sector cut their demand due to the shortage of semiconductors globally.
Currently, €860-910/mt ex-works is the price range in the Italian market, while €930-980/mt is the most common range in northern Europe, all ex-works. This means the general range of prices in the EU market has declined by €25/mt on average in the past two weeks, from the previous level of €860-1,030/mt ex-works.
Meanwhile, buyers in general are still not interested in import offers due to long delivery times, complicated logistics, and the risk of paying duties on volumes exceeding the EU safeguard quotas. According to sources, 300,000-350,000 mt of steel products are waiting at the port of Marghera in northeast Italy and this material consists mostly of coils waiting for customs clearance after January 1. Therefore, ports are still congested and this situation is expected to continue in the first quarter next year. As for offers, sources told SteelOrbis of ex-Japan and ex-Taiwan HRC offers at €845-850/mt and €830/mt, both CFR Italy. At the same time, offers from Turkey are at about €880/mt CFR. One trader stated, "While Turkish suppliers are not competitive nowadays, others are competitive on paper, but prices may vary due to exchange rate fluctuations, and buyers are also worried that volumes may exceed safeguard quotas."
As for the coming period, market players are mostly confident the situation will be better in the first quarter next year, due to expectations of an improvement of demand from the automotive sector (although not immediately), and an expected decrease in domestic supply in Europe. In fact, flat steel exports to the US will increase after the decision to replace US Section 232 tariffs on European steel imports with a tariff-rate quota. In the hot rolled sheet segment, the Netherlands and Germany were assigned the largest share of quotas, followed by Belgium, Italy and Sweden. Sources believe that prices will also be supported by higher energy costs and logistical challenges, and that mills are definitely seeking price increases for the first quarter of 2022, although most sources are not sure prices will be able to increase significantly.