CME N.EU HRC futures rally on China stimulus
North European hot-rolled coil futures prices rallied on the CME Group's contract today, following increases in the Chinese market.
In the brokered market, November rose by €35/t from the 27 September settlement to €630/t in a 2,500t trade, while January traded at €650/t for 5,000t, up by €20/t from the 27 September settlement. October was up by €15/t at €580/t, at a steep premium to Argus' underlying index of €520/t on 27 September. December also rose by €20/t to €645/t. On screen November and December both traded €35/t higher, while March 2025 rose by €33/t to €670/t.
Physical market participants attributed the increases to China's rally, and the European Commission confirming changes to how imports are registered, potentially opening the door for retroactive definitive duties in the investigation against Egypt, Japan, India and Vietnam. Eurofer is also lobbying for more import measures to reduce the effects of global overcapacity.
The strong futures contango led some derivatives participants to think the first quarter was overpriced, given the structural difficulties still facing the European market, such as Germany's economic slowdown and lower demand from key steel-using industries, such as automakers. "Will Germany really be fixed by January," one source said, suggesting the cost of carry was much lower than the premium in the futures market.
In light of the flurry of trading, September was a new record month for the CME's contract, which launched in March 2020. As of 11:21 in London, just over 218,000t had traded on September, up from the previous record of 205,860t reached in January 2023. More volume has traded this year than last year in January-September — around 923,000t has traded this year, compared with around 913,000t in the same period of 2023.
Related news posts
Taiwan's ferrous scrap imports fall 6pc on year in Aug
Taiwan's ferrous scrap imports fall 6pc on year in Aug
Singapore, 30 September (Argus) — Taiwan's ferrous scrap imports totalled 215,245t in August, marking a 6.2pc decrease year-on-year and a 1.8pc drop month-on-month. The reduced import volume was because of buyers avoiding Japan-origin scrap because of a drop in US containerised scrap price from the US west coast. Weak domestic steel demand in Taiwan and low-cost billet offers from China led buyers to limit their ferrous scrap imports. Imports from the US west coast increased by 10.2pc on year and 5.3pc on month as buyers took advantage of falling prices and sought more US containerised scrap. The US accounted for 47.7pc of Taiwan's total ferrous scrap imports in August. The Argus HMS 1/2 80:20 containerised scrap from the US west coast started at a high of $345/t at the beginning of August but dropped to $325/t by 30 August. Scrap imports from Japan fell by 67.5pc from a year earlier to 22,502t in August. The decrease was because the Japanese yen surged, reaching as high as ¥146.17:$1 on 31 August, up from ¥149.20: $1 at the start of the month. A stronger yen meant that buyers had to spend more US dollars for trades, as deals are typically closed in dollars. The reduced imported scrap volumes reflected weak steel fundamentals and expectations of a prolonged downturn during the summer seasonal lull from May to September. An influx of cheap billets from China significantly impacted scrap demand in August. Billet prices were as low as $445-450/t cfr Taiwan in mid-August, trade sources said. Imported ferrous scrap may continue to decline in the coming months if domestic steel demand does not show significant signs of improvement, trade sources said. Some sellers are optimistic about rising scrap prices and volume in the fourth quarter of the year, as slower collection efforts and year-end celebrations usually mean that mills will look to restock more tonnages before then. Taiwan Ferrous Scrap Imports (t) Country Aug % ± vs Jul % ± vs Aug'23 Jan-Aug % ± y-o-y US 102,740 5.31 10.21 856,836 1.85 Japan 22,502 -42.33 -67.48 444,091 -31.64 Australia 4,714 -28.15 -60.99 74,248 -55.62 Dominican Republic 21,952 39.40 57.92 133,572 -17.96 Others 63,338 5.18 54.30 527,058 16.30 Total 215,245 -1.76 -6.19 2,035,805 -10.48 Source: Taiwan customs Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Overcapacity threatens EU decarbonisation: Eurofer
Overcapacity threatens EU decarbonisation: Eurofer
London, 27 September (Argus) — European steelmakers' decarbonisation efforts are at risk because of low-priced imports, according to European steel association Eurofer. "We need to stop the spillover and the impact of that spillover from global overcapacity," Axel Eggert, director general of Eurofer, told Argus , suggesting low-priced imports are "pushing down any possibility for EU steelmakers to generate the margins they need to fund the green transition". "If you don't generate the return you need, you will be unable to make the investments you need. Then even climate targets are at risk. This has to be addressed," he said. With demand declining, particularly in China, and new production being installed in the coming years — in particular in southeast Asia, north Africa and the Middle East — the overcapacity issue will only worsen, Eggert said. Eurofer has been in dialogue with the European Commission, which it says is aware of the problem, and has asked for a structural solution, such as a comprehensive global tariff-like system. It has not requested a Section 232 style tariff, he said. While the EU is not known for the speed of its decision-making and implementation, Eggert said the sanctions on Russia showed it can act quickly when needed. "We do not know what the commission will do. They are aware of the problem, but they need to act fast. We cannot wait a year. That is the challenge," he said. The liberalisation of the safeguard means about 120pc of the 2015-17 import volumes can come to the EU without paying any tariffs, and the impact of this penetration is worsened by demand depression within the EU. The 25pc tariff, even where applicable, is potentially insufficient for some countries too, Eggert said, alluding to the fact that China recently offered into the EU despite dumping and countervailing duties. China could export 100mn t this year, he said, suggesting the country's mills are still exporting despite making losses. Asked about Europe's own overcapacity, Eggert said it is the only major region to have reduced capacity, by about 26mn t in the past 15 years, leading to a worsening trade deficit. "EU steelmakers are continuing to adapt capacity downwards, but we are reaching a point at which further steel capacity reductions will erode the resilience and strategic autonomy of the EU, let alone the negative impact on hundreds of thousands of quality jobs in the EU's steel value chain," he said. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Italian service centres turn to secondary HRC
Italian service centres turn to secondary HRC
Milan, 26 September (Argus) — Italian steel service centres (SSCs) are turning to secondary hot-rolled coil (HRC) as they cannot move their higher-priced prime stock, market participants said on the sidelines of Italian association Assofermet's autumn conference in Milan today. SSCs are buying second-choice material as weak demand means sales of prime material are increasingly lossmaking. With EU mills refusing to cut production, although some have adjusted output, there has been an increased amount of second-choice coils offered in the market. This has allowed SSCs to continue selling processed material in a declining market, which one sheet seller said has been falling by around €10/t each week. While there are some restrictions to using second-choice HRC, such as not being able to meet every customer's request, SSCs can use it for some sales, minimising their losses. Some said SSCs have six months worth of inventory, and stocks will get a further boost from incoming imports in October, which will allow buyers to re-evaluate their stock gaps and establish what they need to purchase domestically. EU mill prices, having lost €47/t in Italy and €36.50/t in northwest EU since the start of September, according to Argus assessments, have prevented imports from being of interest to buyers. The Argus cif Italy HRC assessment has in comparison lost only €15/t since the start of the month. Today some market participants were talking about prices being close to the bottom, a sentiment that was previously seen in June and July, but did not materialise owing to an unexpected further slowdown in demand in September. But producers selling large quantities of second-choice coils, at prices that sources said can be as much as €100/t below costs, is not sustainable. The main issue in the flat steel sector remains a lack of demand, which unless there is an EU stimulus package, will continue weighing on prices, market participants said. By Lora Stoyanova Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Tight supply remains Europe Al driver
Tight supply remains Europe Al driver
London, 25 September (Argus) — European aluminium markets have barely stirred following the slow summer months, as demand in the automotive and construction markets continues to disappoint and sales opportunities for traders and distributors remain sparse even after the holiday period definitively ended. But premiums have remained steady throughout September, as tight supply remains the main driver of the European aluminium market, even more so than earlier in the year, when premiums were climbing amid moderate demand. European aluminium premiums rose by two-thirds over the first five months of the year, with the Argus assessment of the P1020 duty-paid spot in-warehouse Rotterdam premium hitting an 18-month high of $320-350/t in May. Demand, although unimpressive compared with stronger years, increased sufficiently to tip the market balance against tight supply. Availability in Europe was severely limited by low production following sizeable cuts over the previous two years, the absence of Russian metal owing to self-sanctioning by consumers and official sanctions by governments in the UK and US, and aggressive Chinese importing from most international regions. Premiums subsequently edged back slightly to $320-340/t and then began an unprecedented run of flatness over the June-August summer period, as demand fell away in Europe but the sustained tight supply environment stopped premiums from falling back. Throughout the slow summer months, there was a sense that premiums were primed to race higher as soon as demand picked up in the autumn, led by automotive markets that were expected to at least show some improvement after slowing from the middle of the year. But that has not happened, and premiums have continued to flatline at $320-430/t in September, as demand has failed to stir in either the automotive or construction sectors. Europe's largest economy Germany has seen particular weakness in its consumer industries, with the construction sector having been in decline throughout this decade, while major carmaker Volkswagen recently told its employees that it is considering closing some factories. In July, Germany's manufacturing output index hit its lowest since June 2020, according to climate and economy ministry BMWK, with total industrial production down by 2.4pc from June this year and 5.3pc lower than in July 2023. "There has been no bounce-back from the end of the summer. Stockists and distributors still have empty inboxes, which is very unusual for this time of year," one analyst said. "The automotive market is bad and the construction market is terrible." But premiums have not budged against such a bleak demand picture, as supply remains very tight even against that stark lack of buying. The factors that reduced availability in Europe over the past few years remain very much in play, while China's appetite for imports has grown even stronger this year. China's primary aluminium imports in the year to August rose by more than 50pc on the year to 2.58mn t, customs data show. That trend is likely to continue, as domestic Chinese aluminium production is bumping up against the country's output cap of 45mn t/yr. Some had expected earlier this year that China could raise the cap but few are of that view now, especially given the damage done this year to the country's steel industry by excess production. Additionally, most provinces have now mandated efficiency targets. The best way to achieve them is to limit energy use, and aluminium smelters are one of the biggest energy users. "The Chinese production cap is key, and China is within a few hundred thousand tonnes of it already," a second analyst said. "They don't even need to see better demand to keep increasing imports." Tightness in the alumina market will feed through to the smelting industry, limiting output further. UK-Australian mining firm Rio Tinto's alumina output fell by 10pc on the quarter and the year to 1.68mn t in the second quarter, following an incident at its third party-operated Queensland gas pipeline in March, while record Chinese aluminium production this year has also drained alumina supplies. There is little in the way of imports flowing to Europe from other regions. Freight costs remain high, and suppliers in the Middle East and India are showing little inclination to bear the cost of deliveries to Europe without greater price and premium incentives. Consequently, the European market will remain very tight in the fourth quarter, leaving it susceptible to any stirring of demand that could cause premiums to jump. But there seems little chance of any such demand growth until 2025, with few suppliers even reporting discussions for further activity this year. By Jethro Wookey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more