Jun 03, 2020
EUROPEAN STEEL COIL STABLE, ACTIVITY REMAINS LOW
2020-06-05
Stability returned to the European steel coils market on Tuesday, with prices unlikely to decline further, sources said.
A Nordic-based buyer noted that Korean mills were desperate to move their stock into Europe given lack of demand in their home region, and said, “they have a lot of unused capacity and they want to get rid of it.”
Domestic European prices have bottomed out, according to the same source, who said mills are now trying to maintain some sort of stability in price levels.
“One of the reasons mills aren’t reducing prices is that they didn’t see any effect from the buying side. [From Korean exporters] they have reached the bottom for material that will be delivered in September, but they have announced from their side that prices won’t be lowering anymore,” the source said.
He also said that the summer period would “hit people a lot more” and that lack of demand would last until mid-August.
“The automotive has been hit — they’re not selling or producing, so this a major factor, I’ve lost all confidence in the automotive industry. We have ongoing orders for older contracts but this week will be slow. If things don’t pick up by next week, they won’t pick up until August,” he said.
A Benelux service center source lamented the current lack of transparency in prices due to limited buying activity, and that mills were unable to lower their prices.
“It’s such a weird situation — we’re seeing very different prices because of the lack of transactions, and many mills can’t stop production, adding to the supply,” he said. “If they decrease any more it will damage their organization.”
An Italy-focused trader said that there was currently a wider gap in pricing between Italian domestic steel producers.
“Two markets now exist in Italy, one mill is cheaper for HRC but with limited range, so if they don’t have what you want, you will have to pay more — if you have an existing contrast in place from the end of last year then you will get cheaper on a base-plus contract.”
The trader said that the market in Italy was still weak but that activity levels would improve in June and July.
The Platts TSI hot-rolled coil index was calculated unchanged June 2 at Eur412/mt ($460.41/mt) ex-works Ruhr, and cold-rolled coil was assessed Eur512.50/mt ex-works Ruhr, gaining 50 euro cent day on day.
In southern Europe, HRC slipped 50 euro cent lower on the day and was assessed at Eur395/mt ex-works South Europe, its lowest level since September 2016.
— Len Griffin, Amanda Flint
Source: Eurometal
