EUROPE HRC WRAP: Domestic prices slip, trading activity slow

Domestic prices for hot-rolled coil in Europe declined in the week to Friday June 11, but they remained at a high level.

Buyers have been holding back from acquiring large volumes of coil at high prices, preferring whenever possible to pause their purchases to better monitor global trends while also waiting for the European Commission (EC) to conclude its safeguarding investigation.
On Friday, the EC released a draft of its proposed extension to trade safeguard measures. According to the document, the measures on 26 steel products imported into the EU will remain in place for another three years until June 30, 2024. But the permitted quota volumes for these products will increase by 3% year-on-year.
Market sources had expected that the measures would be extended for one year and that the volumes would increase by 5%.
The European authorities will release a final version of the document by June 30, 2021, after the member states vote on it.
Domestic prices were supported by good order books at EU mills. Producers in Northern Europe were heard selling fourth-quarter-rolling material, although Italian mills were still able to offer volumes for shipment at the end of the third quarter.
Although coil availability was still limited, market sources said that demand from the automotive sector had dropped off slightly because of a lack of semiconductors for cars’ on-board computers that has created a bottleneck among vehicle manufacturers. As a result, some additional coil volumes were available in the spot market.
Last week, German flat steel producer Salzgitter declared force majeure after a lightning strike over the preceding weekend. This situation will contribute to the persistent shortage in the European coil market, market sources said.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €1,136.67 ($1,376.26) per tonne on June 11, down by €11.90 per tonne week on week but up by €94.17 per tonne month on month.
Friday’s index was based on market participants’ estimates of achievable prices at €1,120-1,160 per tonne ex-works.
Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy, at €1,123.33 per tonne on June 11, down by €17.67 per tonne week on week but up by €98.33 per tonne month on month.
The Italian index was based on achievable prices and offers heard at €1,100-1,150 per tonne ex-works and deals heard at €1,120-1,130 per tonne ex-works.
The EC plans to set a carbon border adjustment mechanism (CBAM) for imports of some goods, including steel and aluminium, to prevent the risk of carbon leakage, according to a draft of the EC’s proposal seen by Fastmarkets. The mechanism will be applied to imports of aluminium, iron, steel, cement, electricity and fertilizer from outside the customs union.
The EC is scheduled to present the draft officially in mid-July, so the draft currently available might be subject to change.
At the end of last week, market sources said that the EC also planned to start an anti-dumping investigation into hot-dipped galvanizing coil imported from Turkey and Russia.

Maria Tanatar

maria.tanatar@fastmarkets.com

Published

Maria Tanatar

June 14, 2021

15:50 GMT

London