Although local HRC prices in Europe have decreased once again this week, the week has brought some changes to the European HRC market as many suppliers have started to claim that domestic HRC prices have already reached the bottom or “will rock it very soon”. At the same time, given the continuous oversupply problem coupled with still weak demand in the region, market insiders expect mills to announce production cuts in the short run. Meanwhile, trade activity has been slow in the import segment this week due to the uncertainty over potential safeguard duties for the third quarter, while the second quarter allocations have been filled in just the first few days after the new quota period started.
More specifically, offers from European mills have been heard at €650-690/mt ex-works, against €650-700/mt ex-works last week, with some mills in the north having started to offer materials for June delivery, though, according to sources, there have still been plenty of volumes available for May delivery. Offers from Italian mills have been estimated at €650-660/mt ex-works, down by €10/mt on the higher end of the range week on week, while mills in the north have been offering their HRC at €670-690/mt ex-works, against €680-700/mt ex-works last week.
Meanwhile, the tradable prices in Italy have been estimated at €640-650/mt ex-works, mainly the same as last week, while trade activity has remained slow due to high stocks and weak demand in the country. Besides, the workable prices in northern Europe have been estimated at €660/mt ex-works, down by €10-20/mt over the past week.
“Given the supply-demand imbalance in Europe, output cuts are inevitable, but there is no official announcement from the mills so far,” a market insider said.
In the meantime, according to the Europe Commission’s official data, as of yesterday, April 3, European customers have fully used up the second quarter quota of 923,594 mt of HRC of “other countries” origin, including Vietnam, Japan, Taiwan and Egypt, and have exceeded the second quarter quota by about 14 percent, with around 3.5 percent duty to be paid. Besides, as of April 1, ex-India HRC awaiting customs clearance totaled 56,809 mt or 19 percent of the total quota of 294,662 mt for the second quarter.
At the same time, import HRC prices in southern Europe have been estimated at around €560-610/mt CFR, mainly the same as last week. However, according to several European customers, “Asian suppliers are no longer willing to reduce prices”. Offers for ex-Vietnam HRC have been heard at €560-570/mt CFR Italy. However, offers for ex-Vietnam and ex-Japan HRC through traders, including 90-day deferred payment, have been voiced in Spain at around €590/mt CFR. Offers from Taiwan have also been voiced at around €580-590/mt CFR Spain, while offers for ex-Egypt HRC have settled at €610/mt CFR Spain for LC with at sight payment, in direct business with the mill, according to sources.