EUROPE HRC WRAP: Domestic prices gain momentum at end of week

Domestic prices for hot-rolled coil in both Northern and Southern Europe rose at the end of the week to Friday February 21, supported by a lack of competitive imports and a degree of recovery in demand.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was €483.99 ($524.88) per tonne on Friday, up by €4.65 per tonne week on week from €479.34 per tonne on February 14.
The index was calculated based on deals heard at €480-490 per tonne ex-works.
Although domestic HRC prices had been slowly recovering over the course of the week, they moved up significantly on Friday due to a surge of demand caused by re-stocking among some distributors, according to market sources.
Most buyers had been waiting too long and therefore had to pay more to get material, according to market sources.
Some Northern European mills have been reported by similar sources to be sold out for second-quarter coil shipments.
Some buyers, however, were skeptical about the mills’ claims and believed that the steelmakers have been speculating on long lead times, which they can use to drive prices upward and thus achieve further price recovery.
“I get the impression that [Northern European steelmakers] try to control the situation by realizing longer lead times or shutting down capacities temporarily,” a Northern European distributor said.
Domestic hot-rolled coil prices in Italy moved up at the end of last week, with deals heard at €440-450 per tonne ex-works, although steelmakers have been targeting prices of €460-470 per tonne ex-works.
In the meantime, no offers of HRC from Turkey, the main HRC overseas supplier to Europe, were heard late last week.
Fastmarkets’ weekly price assessment for steel hot-rolled coil, export, fob main port Turkey, was $475-500 per tonne on February 21, unchanged week on week.
While good order books will continue to support domestic prices, according to market sources, uncertainty was growing in the market regarding the consequences of the coronavirus infection, which might include hampering the price recovery.
The coronavirus outbreak in Italy does not appear to have disrupted deliveries or trading, but market participants were concerned that it might have a negative influence on prices in the near future.
Hot-dipped galvanized
Demand for hot-dipped galvanized coil (HDG) in Europe has been strong, market sources said. As a result, prices have increased again. HRC is used as feedstock for HDG production.
Fastmarkets’ weekly price assessment for steel HDG, domestic, exw Northern Europe, was €570-600 per tonne ex-works on February 19, compared with €560-600 per tonne ex-works a week earlier. The assessment has gone up by €45-60 per tonne so far in 2020.
The latest assessment reflected deals and offers heard in the market.
“Demand for HDG is strong - better than demand for other flat steel,” a Northern Europe mill representative told Fastmarkets. “We have had many inquiries, even from buyers we have not dealt with recently.”
No import offers for commodity-grade HDG have been heard in the past couple of weeks.
On February 15, the European Commission (EC) initiated a review of existing safeguard measures into a number of imported steel products. This could result in changes to the quotas for materials destined for the automotive industry and other buyers, according to market sources.
HDG was one of the products included in a raft of measures enacted last October and affecting 26 steel product categories, with any imports exceeding a specific quota becoming subject to import duty of 25%.
In the definitive measures, the EC split metallic-coated sheets (product category 4) into two sub-categories - 4A and 4B. The automotive sector, a key consumer, mainly uses 4B material.
But although HDG demand from the automotive industry in the north of Europe has been sluggish recently, sources said that this has not had a negative effect on spot market prices.
Demand for passenger cars in the EU dropped by 7.50% year-on-year in January 2020, following four consecutive months of recovery.
 

Maria Tanatar

maria.tanatar@fastmarkets.com

Published

Maria Tanatar

February 24, 2020

19:22 GMT

London