Distribution sources saw a “difficult” EU HRC market July 14 as end-users compared current spot prices with more expensive material purchased during the rally seen in the wake of Russia’s invasion of Ukraine.
S&P Global Commodity Insights assessed hot-rolled coil in Northwest Europe stable on the day at Eur855/mt ex-works Ruhr. In South Europe, HRC was also assessed stable at Eur780/mt EXW Italy.
The market was largely aligned on workable levels for the Northern European market, with tradable value indications heard in a range of Eur850-870/mt EXW Ruhr.
Offers were heard higher at Eur900/mt EXW Ruhr from one mill, though this price level was not yet considered realistic for the market, with the price seen relatively stable for the near term at Eur850/mt EXW.
While the European market has seen a degree of demand revival, substantial restocking remains limited due to material bought during the rally experienced at the onset of the war in Ukraine.
HRC prices in NWE hit Eur1,460/mt EXW Ruhr at the peak, as assessed by Platts March 21.
“Prices have stopped falling but today’s levels at Eur300-500/mt away from what was bought by service centers and stockholders at market peaks,” said a distributor source.
“This isn’t unanimous for the market, as some traded back-to-back, but it’s definitely weighing on the general sentiment.”
However, demand was expected to recover further in July for September orders.
“Indeed, the main problem is that buyers are sitting on big volumes booked at tragically higher prices,” said an Italian trader source.
“But they will have to come back and restock in July otherwise they won’t be able to get material in time for September — especially considering all the stoppages in August.”
Buyers were heard avoiding the import market for similar reasons, with uncertainty as to the price direction in Q4. Material was heard as custom-cleared in ports at substantial volumes, with ample space remaining in safeguard quotas, averting fears that purchased import material would be subject to a safeguard duty of up to 25%.
Instead, the lack of interest was said to be motivated by fears that material to arrive in Q4 could be odds with future spot prices, with price volatility in either direction — reinforced by a preference to protect high profits achieved in H1.
“Prices at the moment are at a decent level but there are fears material arriving in September-October could be too expensive or too cheap,” said a distributor source.
“Nobody needs the business to breakeven — no one needs the activity after good business from the first six months. Pressures aren’t as they were decades ago, no one has to sell or produce — most are sitting on a bag of gold.”
By: Eurometal
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