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HRC market stabilises in N. Europe, weakens in S. Europe - 21 June 2012

Following ten days in which most buyers were assessing the increase announcements made by major suppliers, participants in the European market report that in northern Europe, mills are firmly trying to pass on slight increases, while extremely weak demand is continuing to weigh on the southern Europe market.

Sources in Germany and Benelux reported major integrated mills holding firm to a €20/tonne ($25/t) increase. A source admitted the suppliers are unlikely to achieve the announced increase of €30-40/t, but said major integrated mills were refusing to give discounts from the level of €520-530/t base for HRC. He added lead times are now at some six weeks both for HRC and CRC, which is considered fairly short.

The announcement of increases by the Italian-based re-roller Marcegaglia has also impacted the northern European market, as Italians have been the most competitive suppliers in recent months. A source in Benelux reported UK-produced HRC currently remains competitive, but is still being offered at a slight premium compared with last month.

“Marcegaglia is looking for higher prices, while Riva is not quoting, leaving us with few competitive solutions beside the major northern European mills,” a source commented, Distributors and service centres are struggling to pass on the increases to end-users, which could force them to negotiate further on the current offers from mills.

Nevertheless, the situation in southern Europe remains bleak, with demand particularly low and no sign of price increases achieved in the HRC market, despite ArcelorMittal targeting €540/t base. A major trader reported that Italian suppliers are believed to have sold HRC at below €495/t ex-works this week in their domestic market. Another believes the market will head to €480/t base during the summer.

Imports from third countries remain mainly unattractive. Russian offers are considered the most competitive with a trader reporting Russian HRC available in southern Europe at €490/t cfr. Turkey is expected to lower further its offers, but at the current level of €520-530/t cfr it remains out of the market.


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