The lack of material and good demand has continued to support HRC prices in the EU market during the past week. However, achievable prices in the domestic market have increased by just €5/mt on average, reaching €1,030-1,100/mt ex-works. Last week, global steel giant ArcelorMittal increased its coil offers across Europe for the second time this month, taking HRC prices to the €1,100/mt ex-works level, up €50/mt compared to its previous offers. However, according to sources, in the past week, European producers have mostly avoided offering material in the spot market, while distributors became more cautious as they do not want to build up highly-priced stocks due to the risk of price decreases in the second half of the year. In fact, it is still uncertain whether the current EU safeguard on steel will be in place or not after 30th June this year, although a proposal on extending it is likely to be unveiled by the end of May.
The combination of material shortage and increasing caution has lead to very few transactions in the past week. Delivery times are still in the late third quarter at the earliest, while import offers are relatively high due to the EU safeguard, increased freight costs, the removal of the tax rebate in China, the worsening of the Coronavirus pandemic in India, and more generally the uptrend in the global steel market. Another factor of uncertainty is the persisting shortage of semiconductors globally, which has been causing output disruptions in the automotive market and thus representing a big concern for flat steel producers. Import offers for HRC are generally around €1,000/mt CFR, according to sources.
Meanwhile, the future of the largest Italian producer, Acciaierie Italiane (formerly ArcelorMittal Italia) is still uncertain. Back in February, the company was ordered by the Regional Administrative Court (TAR) of Lecce to shut all its hot-end operations by mid-April in order to prevent emissions from the plant but had appealed against this ruling. A final hearing was set for 13th May, but the Italian State Council hasn't revealed any decision for the moment. This will be announced in the coming weeks. The plant, a joint venture between ArcelorMittal and Italian state agency Invitalia, is operating with two blast furnaces (No. 1 and 2), while blast furnace No. 4 has been temporarily shut for maintenance and should be restarted in June this year. The company is targetting a crude steel output of 5 million mt this year, compared to last year's 3.3 million mt.