EU HRC: Northwest mills cut prices to stop imports

Market: Metals
09/10/19

Northwest European hot-rolled coil (HRC) prices lurched lower today as domestic mills chased tonnes and tried to prevent a repeat of the import penetration seen over the fourth quarter of last year.

A Russian mill offered into Antwerp at €405/t fca for S235 material today. A trader had been offering at €410/t cfr Antwerp of late and getting interest, with buyers negotiating on price, but today service centres stepped away, suggesting that domestic material, for November delivery, is more attractive. The shortest import lead time now would likely be November production.

While mills in the north have been offering around €430/t ex-works, buyers expect much lower to be available for decent-sized enquiries. In fact, two mills seem primarily concerned about generating cash, rather than sales price. Even mill sources expect €400/t ex-works to be breached in the north soon — a level some traders say they are already procuring at, with some cut sheet prices already below €500/t delivered in Germany.

Many buyers are sitting on normal stock levels of 1-2 months' worth of business, but still feel more inclined to destock because of uncertainty and building price pressure. This is stifling liquidity and price discovery somewhat.

Argus' daily northwest Europe HRC index slumped by €8/t today to €435.50/t ex-works. The daily ex-works Italy index was static at €414.50/t ex-works, pulling the discount to the north down to €21/t. There is a growing consensus that the two could come close to parity soon.

The northwest Europe forward curve fell again, with October dropping to €445.25/t, and November and December slipping by €8/t to €433/t.

Imports continue to be a thorn in the side of Italian producers too. Below €400/t cif Italy, previously available only to the largest buyers, is now being offered for just a few thousand tonnes. A Russian mill offered at €354/t fob St Petersburg today, while a large buyer was bidding for substantial quantities at €365/t cif.

The same buyer was said to have booked Indian material at around €385/t cif, but some thought this was misinformation fed to other third-country suppliers to try to force further price cuts.

Offers from Russia were heard at $380/t fob to Turkey, with buyers still disinterested and actual business expected to conclude $10-15/t lower.

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