HRC prices in EU draw closer to ArcelorMittal's latest target

The persistent shortage of material combined with strong demand has pushed hot rolled coil (HRC) prices up further in the EU market during the past week. Transaction prices achievable both in northern Europe and in southern Europe (Italy) are at €1,000-1,010/mt ex-works, up €40/mt over the past week and up €20/mt compared to late last week. According to sources, the prices should soon reach the latest target announced by ArcelorMittal last week (€1,020/mt ex-works), which was the fourth increase made by the producer in April. The earliest delivery times that EU mills are able to offer are for late third quarter production, while some mills are already offering material for fourth quarter delivery. As mentioned, demand is strong both from service centers and end-users, due to low stocks. Meanwhile, imports do not represent a viable option, according to sources, due to high prices and limited offers owing to the EU safeguard measures. Import offers are generally around €1,000/mt CFR southern Europe, according to sources. HRC prices are expected to increase further in the region in the coming period, although some sources think higher prices may not be sustainable for much longer due to credit limits. However, one trader commented, "Prices may stabilize or even decrease slightly if the European Commission does not extend its safeguard at the end of June and if production keeps ramping up at mills." Italy-based Acciaierie d'Italia, formerly known as ArcelorMittal Italia, and Ilva before that, will restart its blast furnace No. 4 in June, although this is not expected to improve the supply situation significantly. The plant, a joint venture between ArcelorMittal and Italian state agency Invitalia, will then be operating with three blast furnaces (Nos. 1, 2, and 4).