Hot rolled coil (HRC) prices have inched up further in the EU domestic market compared to last Friday, on the back of tight supply and extended lead times. Achievable prices in the EU market have been heard at €790-820/mt ex-works for HRC this week, up €20/mt compared to late last week. The lower end of the range refers to the lowest prices recorded in Italy, while the upper end is for northern Europe.
Late last week, ArcelorMittal raised its HRC prices in the EU market for the second time this month, to €850/mt ex-works in northern Europe and to €820/mt in Italy. Several producers across Europe stopped giving offers, but they aim to come back to the market with higher prices, according to sources. "Italian mills are targeting the €830-840/mt ex-works level," one trader told SteelOrbis. Lead times are well into the third quarter and beyond, and the supply situation is not expected to improve soon. "I believe this trend will last at least until this summer or even until the fourth quarter", one source commented, adding that transaction prices are expected to reach ArcelorMittal's official offers within a short time. "Mills have the upper hand since their clients are willing to pay any price in order to get the volumes they need to run their activities," the same source explained.
Buyers have been also complaining about the difficulty in getting material from abroad, due to the EU safeguard and antidumping measures, and rising freight costs. SteelOrbis has learned that ex-India HRC offers are currently at $900/mt CFR southern Italy for July shipment, while they are $5-10/mt higher for Antwerp, although India's quota is near exhaustion. The latest deals from India to the EU were closed at $885-890/mt CFR. Ex-Vietnam offers have been reported at about the same level. Meanwhile, ex-Egypt offers are at $880-890/mt FOB. HRC prices are expected to stay high internationally in the short-to-medium term, considering that Chinese competition will be low due to production cuts in Tangshan and the expected cut in China’s export tax rebate. Meanwhile, supply will remain low in Europe as several plants will undergo planned maintenance in the coming period, while production will be lower during the summer months, as is traditionally the case. A downward correction may be seen later this year, according to some sources, as the recovery in steel output may start catching up with demand. Import volumes may also increase in Europe if the European Commission decides not to extend its steel safeguard beyond its expiration date on 30 June this year.