EU HRC: North nudges up, import offers soften

North European hot-rolled coil prices rose slightly today in continued quiet trading, as some mills sought a rollover for October rolling.

Argus' daily northwest EU HRC index rose by €1.75/t to €591/t ex-works, while the daily Italian index was unchanged at €595.25/t as the August holiday continued to quieten trade. The twice weekly cif Italy assessment nudged down by €7.50/t to €555/t cif.

A major European steelmaker officially offered to northern buyers at €630/t, but buy-side sources said this level was much too high because of weak demand. Service centres in Germany and the Benelux reported losing cut-to-length deals below €700/t, and as low as €670/t ex-works from some mill-tied distributors. While most offers were around €600-620/t base, they expected to buy below for a reasonable tonnage as mills looked to fill their rolling programmes.

One producer appears less hungry, despite not offering widely for October yet, as it is sending coil and slab to the UK.

Projects have been postponed because of the high interest rate environment, which means service centre inventories are not moving as quickly as anticipated — however they are not highly stocked, as everyone has been managing stock levels, especially those who are approaching their financial year-end. One processor said projects booked earlier in the year for October have been pushed back into the second quarter, given high interest rates.

A buyer quoted a rollover around €610/t said mills should have pushed for slight increases to try and stop the market falling.

With pressure on costs, as Chinese steelmakers reduce their production, some suggested there would be further downside for coil prices as mills will have more wiggle room without sacrificing margin. Traders said €560/t could be a viable price from domestic producers should costs continue to soften. Some expected the Chinese steel market to be close to bottoming, and a flurry of short covering could stabilise prices, helping sentiment in the global marketplace.

Chinese HRC was offered into Antwerp today around €600/t by at least one trader, although there are negotiations ongoing against another offer tabled as low as $510/t cfr, which is around €540/t including duties at today's exchange rate with dumping and countervailing measures of 18.1pc.

Sustained decreases in Chinese HRC prices have filtered into lower offers for HRC, especially from some Asian sellers. The softening is exacerbated by the strengthening of the euro against the US dollar, making dollar-denominated offers work out lower in euro than last week.

A Vietnamese mill was confirmed to offer at €535-540/t cfr EU, but it was struggling to find any interest. India was reported at €560-575/t cfr south EU.

One offer from a Turkish mill stood at just under €560/t cfr Italy last week, whereas another mill was heard offering HRC at between €570-590/t cfr, duty included. Trader offers have been made at a premium to these prices, especially for some higher-quality Asian material, although one seller was heard close to the Vietnamese offer. Japanese cold-rolled coil was offered into Antwerp at €665/t fca, down around €20/t over the last week.

Feedback from buyers was limited, with many still absent from the market for holidays.

In the futures market today, October traded twice at €616/t on the CME Group's north European contract, while two fourth quarter strips traded later in the day at €630/t.

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