Hot rolled coil (HRC) prices have declined further in the EU market due to a worsening of players' sentiments in the past week. As reported previously, local mills have been under pressure in the past few months since several buyers in the automotive sector cut their demand due to the shortage of semiconductors globally. According to sources, the situation is not expected to improve in the first quarter of 2022, with consumption from the automotive industry improving "probably later in the year". In this context, buyers in general have refrained from placing orders, as "there's a lot of uncertainty" and they foresee further price reductions in the coming period. On the bright side, the US-EU tariff-rate quota system that will commence on January 1 will enhance European producers' export opportunities, reducing supply pressure domestically. Sources believe that prices will also be supported to a certain degree by higher energy costs and logistical challenges.
Currently, transaction price ranges are at €850-900/mt and at €910-960/mt respectively in the Italian market and in northern Europe, both ex-works. This means the general range of prices in the EU market has declined by €15/mt on average in the past week, from the previous levels of €860-980/mt ex-works. Prices may decrease by a further slight margin in the coming two weeks, while they should trend sideways during the festive season in Europe, i.e., until early January.
In the past few months, EU buyers in general have not been interested in import offers, mainly due to the risk of paying duties on volumes exceeding the first quarter quotas. However, sources underlined that some material being offered now may go through customs clearance in the second quarter next year, i.e., when brand new quotas are available, a circumstance that could generate some negative pressure in the coming period. SteelOrbis has learned of ex-India HRC offers at around €830/mt CFR Italy with delivery by late February, and of ex-Japan offers at €845-850/mt CFR.