IRON and STEEL
Italian hot-rolled coil (HRC) buyers exposed to Ilva are paying higher prices than some others, given uncertainty about the future of the plant.
As a result, Argus' domestic Italian index rose by €1.50/t today to €447.50/t ex-works, while the northwest European HRC index was static at €460.75/t ex-works.
A wholesale change of management on the ground at Ilva has sparked talk that ArcelorMittal will look to exit the plant.
One large Italian buyer was reported to have booked at around $505/t fob north Africa for 12,000t, equating to around €475/t cfr with $20/t freight. The buyer had been bidding around $490/t fob for 30,000t, against an offer of $510/t fob for a smaller amount, but the seller wanted to hold on to some of the material as it anticipated achieving a higher price. It has sold into Spain at $510/t fob, but some suggest this involved some thinner gauge pickled and oiled material, which is in shorter supply than dry coil in Europe.
Some said the deal price was too low, while others said it was too high, encapsulating the uncertainty and nervousness pervading the wider European coil market after the steep rise in offers so far this year.
A tubemaker similarly exposed to Ilva was reported to have booked a huge quantity at the equivalent of around €470/t delivered from a domestic mill. But one service centre procuring much smaller volumes said it was still able to buy HRC significantly below the official €450-460/t ex-works offer of mills.
The northwest European HRC market was static as buyers tried to ascertain whether demand would support the prices being demanded by mills. A smaller producer is still offering March production around €460/t ex-works, but will target €480-485/t for April rolling, in line with several other northwest European mills. A German mill has pulled all of its export offers in anticipation of profiting from the rising domestic market.
Sentiment is incredibly mixed in the marketplace, with many questioning whether real demand will support the concerted push by mills. Some traders have clearly gone long in anticipation of the mill price push working because of the firm international trend and restocking. Others see long import positions as too big a risk, so are buying smaller clips domestically and staying back-to-back.
Material has been quoted into Antwerp at around €470/t cfr including duty from a Russian mill, a level some traders claim to be getting interest at. But no buyer reported being interested in this level.
A Turkish buyer exposed to Fos-sur-Mer, where ArcelorMittal has declared force majeure, was very sanguine about the perceived disruption. But at the same time, a galvanising line in Italy was reportedly concerned about supply because of the declaration, according to a trader.
In the north, sheet prices are seemingly moving higher, with some service centres trying to push outsell up by €30-40/t. But there are still pockets of cheaper selling as decoilers look to generate cash from stocked material bought at lower prices in the fourth quarter.