Posted on 30 May 2018
As June beckons, both coil mills and buyers in the EU are trying to understand the future developments of the market to organise their respective strategies for the second half of 2018. The market seems to be holding up relatively well, despite a slow-down in demand during the second quarter and recent lower import offers, Kallanish hears from sources.
Large buyers currently discussing new long-term contracts are being offered slightly increased prices by European mills compared with their last purchases. This is mainly due to the overall recovery of spot price levels across Europe compared with November and December 2017.
“We cannot say that spot prices are increasing in Europe now, but consumers purchasing on long term contracts now need to accept some slight increases as the levels are higher that when they discussed the H1 agreements back in November and December. According to our calculations, increases will be around €15/t and up compared with H1 agreements; we don’t see much resistance to this,” a senior source at a major mill explains.
HRC spot prices in Northern Europe are currently €10-35/t higher than in November/December according to Kallanish price monitoring. In southern Europe the situation is slightly different as Italian spot prices for HRC are currently more or less in line with December 2017 levels and only €10-15/t above November prices.
“Of course, spot prices have been under pressure in Italy and Poland lately, but other parts of Europe are much more stable,” the source confirms.
Looking ahead, both June and then H2 are being viewed with relative optimism as buyers are expected to place some orders for Q3 and Q4 deliveries while order books at mills remain healthy. “I see no reason for mills to become nervous at the moment. The only variable element is the availability of imports at a competitive level going forward,” the source concludes.
Further support for coil market pricing sentiment could come from any EU decision to impose some sort of new limitation on imports related to the ongoing safeguard investigation. An announcement on this matter could well arrive during June, Kallanish understands.
