UK hot-rolled coil (HRC) prices fell again today as one Benelux-based seller offered at aggressive levels.
The seller was indicating £385/t ddp West Midlands for S275 and was likely to drop lower to entice demand. The mill said it was competing with a Russian offer, which was heard to have been as low as £365/t ddp, but was not confirmed.
Other western Europeans were at the £420/t ddp West Midlands level and waiting for an industry conference next week to provide clearer direction. One domestic mill was trying to hold above £400/t ddp, but came under pressure from the Benelux mill with a similar product range. The other domestic UK steelmaker was off the market, awaiting further direction; in meetings with buyers, it suggested nothing was likely to change without demand increasing.
Trading firms were trying to get below £400/t ddp for wide coil to incentivise buyers, but found it difficult.
Argus' weekly domestic UK HRC assessment slipped by £10/t to £395/t, meaning it is down by £37.50/t over the past two weeks, partly because pound sterling is stronger.
Stockists have seen their margins savaged by strong competition and anaemic demand. One reported losing business for processed sheet at about £450/t delivered, when its cost of stock was £440/t. Given it takes about £50/t to process a coil into sheet and ship it out, this level provides no margin. Service centres were selling based on replacement cost — as often happens — rather than the actual price of the material being processed. One service centre's outsell price had been £480/t-plus six weeks ago, meaning its selling price has shed £30/t.
Service centres were also dissuaded from buying by the impending year end and continued price erosion, which meant inventory kept depreciating. Ongoing reductions in UK automotive production did little to help sentiment, even for those not selling to carmakers; automotive sub-suppliers are still competing for business in other sectors.
An Italian seller was offering cold-rolled coil into the UK at £465/t ddp for December arrival, considerably below the £515-520/t ddp level people had been paying not so long ago. Some market participants expected prices to slip below this level in the next few weeks.
