Italian coil transaction prices are weakening by some €10/tonne ($21) compared to ten days ago as the market continues to stagnate, Kallanish hears.

Service centres however say downstream demand resumed from the third week of March. Their order books are being filled and lead times stretch into July for some grades. Volumes are finally resurfacing amid apparent demand, thanks to their customers now ordering a little more than their usual back-to-back needs.

However, this improved activity is happening at low prices. The recovery in sheet and tube values has been insufficient to build up solid margins, and the products are lagging behind hot rolled coil prices. End-user sectors’ activity remains subdued, with the outlook negative.

“Several flats consuming sectors are plodding along and are not reporting any substantial improvement in consumption, apart from a technical restocking after a weak first quarter,” a service centre comments. The first quarter has been “terrible” downstream and despite this small demand rebound, tight margins remain a point of concern, he adds.

Although some HRC contracts in Europe are showing a slight decline compared to the beginning of the month, no collapse is forecast. Import values from Asian producers seem to have reached rock bottom. Offers from Japan, Taiwan, Vietnam and Turkey are at between €570-580/t cfr Italy, with a low point of €560/t cfr.

Buyers’ strategy is to continue to purchase limited volumes of HRC in Europe and from Asia, spreading their orders across all producers to diversify procurement sources and lead times. Purchasing material from Vietnam is now considered risky due to the quick EU “other country” quota exhaustion and possible application of import duties.

This week, sources attending the Tube & Wire tradeshow in Dusseldorf report no new contracts. Both buyers and sellers are testing the market to understand offers and lead times but, so far, “nothing concrete has happened”, one says. The numbers being floated are €560-580/t cfr from Asia and about €620-640/t base ex-works from EU producers, unchanged on-week. An Italian mill is however mulling some increases and believes EU HRC levels may rise by about €30/t after the Dusseldorf event.

Buyers however see the market as fragile and are not confident about their performance, given the compressed margins. Despite the restocking seen in recent weeks, “the scenario has not changed. I see neither strong increases nor a price collapse for coils, but maybe a slight €10-20/t fluctuation. We should continue to see this sort of demand for about a month before gaining confidence and refusing customers’ low bids, and then think about increasing our prices,” another service centre comments.