Hot rolled coil (HRC) demand has improved in the European market since the easing of lockdown restrictions, but it has remained weak overall, market sources have noted. However, local producers have succeeded in increasing transaction prices in the past few weeks, especially thanks to the lack of competitive import offers. Deal prices have reached €380-400/mt in the Italian market, up €10/mt on the higher end in the past week, while they have increased by €5/mt on the lower end in northern Europe, to €400-410/mt, all ex-works. At the same time, official offers are at €400-420/mt and at around €440/mt ex-works, in southern Europe and northern Europe respectively.
As mentioned, demand is not strong yet, although some distributors have started to restock. Automotive demand in particular remains subdued with passenger car registrations falling by 41.5 percent in the January-May period this year and by 52.3 percent in May alone, both year on year. But various automotive purchase incentive programs by some European governments could help limit the decrease in car sales in 2020, which is expected to be around 20 percent by Fitch and 25 percent by the European Automobile Manufacturers' Association (ACEA).
Meanwhile, European HRC producers are insisting on higher prices amid low margins and limited availability of import offers, especially after the latest amendments of the EU steel safeguard and due to the ongoing antidumping investigation on Turkish HRC. According to sources, import HRC offers in Italy are in the range of €390-420/mt CFR on average, which is too high to spur any significant interest, although some suppliers may be willing to accept lower bids.