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N. European HRC prices up on higher mill contract offers for Q1

Wednesday, 21 October 2020

North European steel coil prices saw an uptrend Oct. 21, while higher contract offers for 2021 were also announced by a market-leading mill, market participants told S&P Global Platts.

Several sources cited contract offer prices at Eur550/mt ex-works Ruhr for hot-rolled coil by a market leading mill, which was later confirmed. Sources said previously they would expect a “three-digit” increase in contracts concluded a year ago when the market was in downturn. A European mills source said contract talks might be concluded “not easier, but faster than expected” as there would be a willingness to secure volumes now.

While the European steel market will enter long-term contract talks imminently, mills are expected to take a firm stance on the spot market as well during the negotiation period. The daily Platts TSI index for HRC Northern Europe was up Eur4.50/mt on the day at Eur503.50/mt EXW Ruhr Oct. 21, while the daily Platts TSI index for HRC Italy remained unchanged at Eur485.50/mt EXW Italy Oct. 21.

Over the past week, several market sources had an expectation of further price increases largely due to the perpetual supply shortage seen across most steel products as well as the absence of imports in the EU. A European mill source said that deals could still be within reach at the Eur510/mt ex-works Ruhr price level, while offers were at Eur530/mt.

It remains to be seen whether the market would be able, or even willing to accept higher prices looking ahead to Q1 of next year.

Other leading mills were reportedly offering hot-rolled coil between Eur525-530/mt ex-works Ruhr, Eur510/mt ex-works Ruhr while another producer was asking for as low as Eur480/mt for December delivery, however, this could not be immediately confirmed.

In Italy, a distribution source said price increases for hot-rolled material were anticipated at Eur500/mt ex-works Italy and for cold-rolled material at above Eur600/mt ex-works Italy.

A German trading source said he had gotten wind of further price increases but cautioned that customers were not confident these would be “sustainable price movements” in light of an upsurge in coronavirus cases in Europe.

“I think most of the customers that were positive recently will act cautiously and won’t buy bigger quantities,” the trader said, which would ultimately lead to a Catch-22 issue for some EU buyers.

He added, “A customer told me yesterday that there is a dilemma – if prices go up, they can no longer demand higher prices from end-users, but if prices go down, it’ll be worse as they bought at higher levels [previously].”

The same source said import prices were on par with domestic prices, and quoted Eur570-575/mt CFR Antwerp ex-India and ex-Taiwan.

“If you compare with EU mills, there is no price advantage to go for imports,” the trader said.

-- Amanda Flint, Laura Varriale

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