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Western European mills push for coil increases

Western European mills push for coil increases

A number of western European coil mills are pushing for price increases of around €20-€30/mt across the product range.

ArcelorMittal has announced increases of €30/mt for all new orders for September delivery, market sources said. The move will take hot rolled coil offers to €515-520/mt on an ex-works Ruhr basis, or €550/mt effective delivered for western Europe. On an ex-works Ruhr basis CRC would move up to €615-620/mt, and base grade hot dip galvanized coil up to €650-660/mt.

A smaller mill was heard to have increased its HRC offer price by €20/mt to €500/mt ex-works Ruhr, while a source at another of the tier 1 western European producers said they expected to announce increases for September delivery. “We are finishing off August now and then we look to make an increase, but we don’t put a number on it yet,” said the tier-1 mill source, suggesting it would be astonishing how quickly mills react compared to late 2015 when prices were drastically decreasing.

“We have started with the increase this week and also taken bookings already for that. The market looks like it’s going upwards,” said the source at a smaller mill.

“There is real demand, it probably can’t be much better than we have. It’s not just PMI and indexes but end users are really good. On apparent demand we’ve had a quite serious period of destocking, but that seems to turn now and is accelerating and turning into a lot more customer interest. It’s clear that international pricing is giving quite high signals, China is surprisingly strong,” a mill source said.

Many pointed to support for the international market from Asia, with import offer prices into Europe less attractive. Indian mills have been an increasingly significant presence in Europe, but with Chinese export offer prices strengthening, they have turned their attention to the southeast Asian market where they are now more competitive.

However, there was skepticism about how long the Chinese price rally could be maintained, with one service center buyer in the Benelux doubtful domestic demand can be so strong as to absorb increased steel production. “When you are exporting 25% less than last year and you’re saying you’re well booked? I don’t believe it.”

A trader said the expected introduction of anti-dumping duties for HRC and HDG should support price increases, as long as the mills were more conservative than they were in the price rally at the end of 2016 when they announced €50/mt increases.

“I think it would be stupid for them to go like they did before, the summer on the continent is a very dull period and I think they should at least get some decency with small climbs of €20-30 because then we all know what happens”, he said.

-- Peter Brennan and Laura Varriale