Business activity in the European hot rolled coil (HRC) market has been weak lately. The main buyers aim for lower prices for HRC from mills, taking into account slow demand, still high stock levels, and continuous pressure from falling import prices, especially from Asia. Local HRC producers, however, prefer to take their time for now, evaluating the market prospects given the recent decline in energy costs and anticipated production cuts which will help to balance supply and demand in the region. As a result, the gap between mills’ offers and customers' bids has remained wide, while both parties have different views on future market developments.
Accordingly, the general range in the EU HRC market has remained mainly unchanged over the past week, standing at €650-700/mt ex-works. However, more specifically, the tradable level estimated by southern European mills, Italian mills in particular, is at €680-700/mt ex-works, down by €10/mt on the lower end of the range week on week, though most buyers are estimating the achievable level at around €650-670/mt ex-works. “Few inquiries for HRC are heard at our warehouses, while customers mainly refuse due to anticipation that prices will fall further. Just some small sales for immediate delivery and use have been done locally at around €690/mt delivered,” one source said. In northern Europe, most customers have reported the tradable level at €650-680/mt ex-works, the same as last week. However, according to a source, “Although some buyers still expect to book at €650/mt ex-works, some have reported official offers from northern European mills at €700/mt ex-works”.
In the meantime, market expectations regarding the future price trend have been differing in the EU. On the one hand, most European mills expect to sustain prices given anticipated restocking in December. On the other hand, most European buyers are skeptical regarding the activation of business, emphasizing the sufficient material in stocks, which may restrain restocking until even February 2023. Furthermore, market insiders expect prices to go down further given the recent decrease in energy costs.
In the import segment, HRC prices in southern Europe have maintained their downtrend and sentiments have remained largely negative given no visible signs of a demand recovery. In particular, import HRC offers have been reported mainly at €620-660/mt CFR, compared to €650-690/mt CFR last week, with the lower end of the range corresponding to offers in the Italian market and with the higher end of the range in Spain. More specifically, suppliers from Asia, including those from Japan and Taiwan, have been the most competitive among all suppliers, offering €620-630/mt CFR Italy, down by around €30/mt week on week. Meanwhile, according to customers in Spain, at the beginning of this week offers for ex-Indonesia HRC were at €660/mt CFR, while suppliers from Japan and Taiwan were offering at €650/mt CFR, but “today [on Thursday], when Spanish buyers saw that Italy is receiving offers at €630/mt CFR and lower, everybody is expecting these numbers from all Asian mills in Spain as well.”