Reduced domestic supply and the lack of competitive imports offers have been the key drivers of the uptrend of HRC prices in Europe since late June. However, the market has cooled down lately and the increasing trend has lost its momentum, as reported last week, as most buyers are cautious towards new deals.
Nevertheless, HRC base prices have inched up a little in the Italian market, going from €470-480/mt to €470-490/mt, both ex-works. At the same time, prices have trended sideways at €485-500/mt in northern Europe, ex-works. As reported previously, producers are targeting higher prices, i.e., €490-510/mt in the Italian market and levels of €520-530/mt in northern Europe, respectively for December-January shipment and for January-February shipment. Producers claim their order books are good, sources reported. However, buyers seem to be resisting further price increases, having restocked heavily in past weeks, and they are also waiting for the situation to become clearer internationally after the return of China from its long holiday.
As mentioned, import activities are limited due to high offers - at €475-495/mt CFR Italy on average. However, things may change if import offers decrease and/or domestic offers inch up further in the EU. Furthermore, local sources have reported that the EU steel safeguard which played a huge role in supporting domestic HRC prices may not be renewed when it expires next year. EU Trade Commissioner Valdis Dombrovskis told lawmakers at a hearing in early October that the extension of such measures would be against the World Trade Organization's rules and could expose the bloc to hefty retaliation from trading partners. He estimated that the value of the safeguards is around €20 billion, and added that the European Commission is examining how the safeguards could be substituted by other measures, e.g., through anti-dumping and anti-subsidy measures within the WTO rules. The ongoing investigation on ex-Turkey HRC offers is already taking a toll on imports from that country, as retroactive temporary measures could be applied from mid-October onwards.