Hot rolled coil (HRC) and cold rolled coil (CRC) markets were in recovery mode in May. Many factors contributed to the recovery as producers introduced prices hikes and announced 'minimum prices', according to an analysis by The Steel Index. Scrap prices started moving up in May and US weekly stel output hit a 6-week high and automobile major Toyota has announced that capacity utilisation rates would rise to 70% in June from 30% in May.
PMI data showed US manufacturing remaining in a state of growth, though the growth rate appeared to dip sharply, to the lowest reading for 12 months.Import levels grew strongly, with arrivals now starting to hit US shores. Lead times for HRC fell again—to just 4 weeks, TSI said.Turkish HRC showed strength, rising US$10/t (1.3%) w-on-w and US$28/t on a 4WC to reach US$790/t. The HDG market also showed improvement, rising w-on-w and â–º up US$18/t over a 4WC. Chinese HRC export prices to Europe and the US eased slightly w-on-w (down US$5/t), though on a 4WC, they are slightly up (to US$720/t FOB) —reflecting less bearish market conditions in export destinations. CRC offer prices (FOB) are stable, though down –1.8% 4WC, to US$784/t. Chinese HRC export prices to Asia rose by US$2/t (0.3%) m-on-m, holding relatively steady at
US$70.
The divergent demand fundamentals between N. and S. Europe continued in May, despite Northern European PMI’s weakening.This proved another factor in keeping an average HRC premium of €43/tonne for Northern material in place in May. The spread of ex-mill European HRC prices in S. Europe and FOB HRC exports from China eroded from US$113/t, to US$66/t by month-end. In contrast, N. European HRC import spread remained in triple digits (US$141/t), losing only US$25/t over May.
N. European 4WC in HRC prices saw a minor rise of €1/t (0.2%) in May. The last reading taken saw prices rise €6/t week-on -week (w-on-w), suggesting the trough may have been reached. S. European prices have been more pressured by imports,losing €15/t on their 4WC, though remaining level on w-on-w measures, again suggesting a bottom may have been found. CRC price falls in Northern Europe lagged those of HRC, so have continued down, despite signs of HRC stabilising: the 4WC saw a fall of €17/t, though there was no change w-on-w. S. Europe’s 4WC was down €6/t, & also flat w-on-w.
Galvanized prices fell throughout Europe. N. European HDG dropped €7/t on a 4WC, to reach €699/t. While S. European HDG fell –0.7% w-on-w, its 4WC is registering a slight rise of €5/t, to €650/t. N. European plate had further to fall over May as stockholders reduced stock prior to the Summer holiday season: the 4WC was €31/t, down –4.1%. In S. Europe, the 4WC was –1.0%, though the last w-on-w change was upward….by €5/t. Rebar prices in Northern Europe were mixed; up 2.1% on their 4WC, though down €12/t last week. The Southern region was more positive, registering a minor €2/t rise in the last w-on-w movement and up €10/t on its 4WC. With scrap prices in Turkey
moving upward, firming European scrap prices, a potential source of weakness in rebar markets may have been removed for the short term.
TSI’s latest market survey shows a recent change in sentiment in the US market, where 23% of those polled expected prices to increase (over the next 3 months) compared with less than 5% in the week prior to this. The latest European market outlook shows weekly stock levels decreasing for 40% of those polled, with less than 10% of market participants surveyed stating an increase in stock levels.
Strong import demand from Southern Europe for flat steel has seen Turkish HRC and CRC prices strengthen over the month.This, along with rising scrap prices, is currently lending support to domestic price increases, though the European holiday slowdown may interrupt such rises.Following ArcelorMittal’s announcement to temporarily idle its furnaces in Liège and Florange, more mills may look to adjust production during the summer season, with implications for steel stockholders and end users.