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"Panicking" producers put pressure on EU coils: mill source - 26 April 2012

The flat steel market remains quiet, but producer sources expect a new wave of purchases, as stocks are low at distributors and service centres. Nevertheless, some suppliers are reported to be “panicking” and giving discounts, triggering possible further price reductions.

A senior trader reported this week at the Hannover Messe conference that most northern European distributors and service centres confirmed they need to place new orders. A mill source in Benelux confirmed this expectation but stressed that competition among European mills was increasing and some were “panicking” as order books are shorter than expected.

He added that cold-rolled and hot-dip galvanised clients were reportedly securing discounts from mills in the area and Italian suppliers. CRC prices could go below the €600/t ($793/t) ex-works base for Q3 and already the asking price of €630-640/t base ex-works was too high compared with transaction market levels, he concluded.

A source in Spain said that in addition to the competition between different mills, some service centres were also lowering prices to secure volumes, with HRC sheet sold in the country at €560/t DDP, 60-90 days payment.

“Most buyers expect prices to correct downward,” a trader said. “Nevertheless they will have to get back to buying in the coming weeks and, if European mills hold firm on their prices, stability is still a possibility in Q2 and Q3.”

Meanwhile, imports into Europe are slow as European producers’ offers remain competitive. This week a trader reported a sale of hot-rolled coils into Europe at €526/t CIF Antwerp for 3,000t of Indian material (July delivery), but other market sources could not confirm hearing similar offers.

Another trader said the Indians were currently not selling HRC into Europe: a source at one of the major S.European ports reported offers from Turkey and China for new production at €550-560/t CIF, with HRC at docks sold at €530-540/t FOT.


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