Posted on 16 Mar 2021
Foreign sellers have found their way back into Europe as chronic steel shortages, long delivery times from mills and slimmer buying opportunities weigh on the domestic market, sources told S&P Global Platts March 15.
Customers were heard to be registering more interest in import material, with some buyers in Italy reportedly able to fetch discounts.
"In the past two weeks we've seen a storm. There is a lack of material in Europe and demand is very strong," an Italian mill source said, "Today if you buy from imports you get more or less the same delivery time, and you can save around Eur30-40/mt if you're quick enough to get an allocation."
Hot-rolled coil import prices were heard at Eur742.50/mt ($885.89/mt) CIF Italy Ports ex-Asia and cold-rolled coil prices at Eur865/mt ex-Asia, with the latter deemed "the best import offer for the Italian customer," according to the same mill source.
The same mill source said it would not be a surprise to see HRC stabilize at Eur770-780/mt ex-works Italy by this week, making imports more attractive to customers.
Platts assessed North European HRC prices stable at Eur780/mt ex-works Ruhr, and in Southern Europe, prices were assessed up Eur5/mt at Eur765/mt ex-works Italy on March 15.
In Northern Europe, HRC import prices were heard at Eur725/mt CIF Antwerp ex-Vietnam, with hot-dipped galvanized steel prices heard at Eur970/mt CIF Antwerp.
Likewise, in Germany, a distribution source said customers were not exempt from the squeezed market conditions, even if they had held long-term contracts with their suppliers.
"We see poor delivery performance from force majeure announcements -- even if you have contracts, you'll get tonnage, but not for the date you requested," the source said. "Mills are not finished yet, they are pushing the pedal to the metal trying to reach new heights."
HRC prices in Europe are at their highest point in over a decade at Eur780/mt ex-works Ruhr, a level unseen since July 2008.
Another German distributor complained of the inability to replenish stocks efficiently due to the ongoing shortage in Europe.
"We can't fill our stocks as quickly, we have gaps. It's hard to get material for a good price," the distributor source said.
Options for imports of hot-rolled coil material from Russia and Serbia are nearing exhaustion, with remaining quota allowances at 34% and 40% left, respectively, and South Korea's quota allocation fairly ample at 63%. Meanwhile, India's quota balance is now exhausted and considered critical; European Commission data showed March 15.
The data also showed the "non-country specific" quota stands practically unused at around 2.69 million mt left, or 97%, with 320,137 mt awaiting allocation at European ports.
In the fourth quarter of a year, named countries that have exhausted their own allocations are permitted to utilize the "non-country specific" available balance.
Turkey, meanwhile, is on its way to exhausting its quotas, with 70,328 mt (22%) still available as of March 15. Once a quota balance dips below 10%, importers are obliged to deposit with customs authorities a 25% bank guarantee to cover any potential duty liability.
While imports are offering somewhat of a respite to higher domestic European prices, an Italian service center source said this would be short-lived, with Asian sellers expected to raise their prices this week to catch up to European increases.
"There is a possibility for a discount [on imports] but only because there's been an unbelievable acceleration in the last week in Europe," the source said. " I think in the next week the situation will change with Asian and Middle Eastern suppliers raising their prices. Usually it's been this way."
The same source did not believe buyers would be flocking towards imports, with most choosing to manage their risk by asking for smaller volumes and practicing back-to-back buying.
Source:Platts
