After a temporary pause, in the past seven days prices of hot rolled coils (HRC) have started to fall again both in the Italian and European markets. Currently, domestic HRC prices in Italy are between €455/mt and €465/mt ($514-525/mt) ex-works, declining by €7.5/mt on average compared to a week ago. Delivery times are very short, at a minimum of four to five weeks, and service centers have high stocks, a situation that has caused an increase in competition at the distribution level. Demand from the automotive and construction sectors remains weak in the European market. Italian car output declined both in January and February, year on year.
Meanwhile, import HRC offers are not very attractive compared to domestic prices in terms of both delivery times and prices, with Turkish offers standing at $490-510/mt FOB. According to market sources, it is not clear if prices will suffer further reductions in the coming period. In particular, the high costs of raw materials should cause the profit margins of producers to be squeezes, especially in the third quarter, when they have consumed the raw material they purchased in past months.
Furthermore, it is rumored that several European flat steel producers may bring forward their summer maintenance works in order to prevent further price slips. In general, negative sentiment prevails since no one expects a significant recovery in demand and prices for the remainder of this year.
Meanwhile, domestic producers’ HRC prices in northern Europe are at around €490/mt ($554/mt) ex-works.
€1 = $1.13