European producers’ attempts to raise prices could widen the gap between EU hot rolled coil rates and import prices, causing buyers to boost their import purchases despite duties, Kallanish learns from Italian coil buyers.

Recent adjustments to EU safeguard measures and anti-dumping duties are projected to lead to a reduction of 5-6 million tonnes/year in EU flat steel imports (see Kallanish passim). This includes both hot and cold rolled coil, in addition to coated flat products.

“While their [mills’] narrative is legitimate, the push for price increases for HRC appears speculative. It is supported by protectionist measures instead of real consumption and market demand, which remains notably weak,” an Italian service centre comments.

ArcelorMittal is reported to be raising its HRC prices in northern Europe to €700/tonne ($773) delivered, while seeking €680/t delivered in southern EU countries. Numerous European steelmakers are aiming for similar levels, but service centres are facing significant challenges in increasing their prices and are reporting low margins and non-existent profitability.

“The current demand levels are significantly weak,” another service centre notes. "We are experiencing pressure from rising prices from HRC producers, while simultaneously facing a downturn in sheet and strip prices." He notes that at €700/t delivered, EU producers are merely widening the gap with import prices. Values from countries like Indonesia or Malaysia range between €540-550/t cfr Europe.

The market is currently assessing the level of duty buyers will pay for material imported outside of quotas following the renewal of quotas on 1 April. Ports are experiencing congestion for HRC and particularly hot-dipped galvanised products from Vietnam, as Vietnam’s quota allocation has been exceeded. During the previous quarter, buyers were subject to duties ranging from 8% to 10%.

“Achieving margins of €50-60/t is vital for us,” the source comments. Should European prices hit €700/t, buyers would find imports priced at €550/t cfr to be financially viable. Even after accounting for duty, import prices would still be lower than European prices.

“There is a necessity for price increases across the entire value chain; however, we are currently not observing any upward movement downstream. There are no indicators of improvement from our clients. The automotive and appliances sectors are underperforming significantly,” he concludes.

Should EU prices rise, sources such as Turkey, currently presenting offers in the range of €590-600/t duty paid, will regain their appeal. Additionally, suppliers from India are reportedly providing offers at €580/t cfr. Re-rollers are facing challenges in raising prices, in line with service centres. Hot rolled sheet is priced at €700/t delivered, although a lower rate of €680/t is also accessible.

Italian domestic HRC is reported to be in the range of €630-640/t delivered, according to sources.