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Italian market lambasts lagging HRC contracts

  • Market: Metals
  • 27/01/25

Italian steel sellers are increasingly displeased by lagging index-linked contracts, particularly for hot-rolled coils (HRC) and derivative products, as they position for an upturn in prices on the back of constrained import supply.

Service centres are currently shunning spot purchases in favour of contractual index-linked volumes, to mitigate against rising spot prices. Some sellers have actively tried to move away from index deals in recent years where they have perceived them as lagging fair market value.

Argus' domestic Italian index, which tracks spot market movements on a daily basis, has risen by €18.75/t so far in January, and a total of €29/t since the start of December. The market reached bottom at the end of September-start of October period, when it came close to €530/t ex-works, and in the last quarter was cautiously moving up, driven by signals of tightening import trade measures, to which Italian prices are particularly reactive, given the exposure to imported coils.

And mills see prices increasing further on reduced import penetration caused by the European Commission's safeguard review, the results of which are expected later this quarter. European steel association Eurofer has requested a 50pc cut in flat steel import quotas as well as a melt and pour clause on Chinese steel, to protect against global overcapacity.

It is not only sellers that are displeased with the lag in indices — buyers of coils said that while they see the spot market moving up, and therefore try to align their offers to end-users, they are unable to pass on the expected increase in costs.

Steel HRC ex-works Italy €/mt

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