IRON and STEEL   Auto  

EU HRC: First 2019 automotive deals done as rollovers

Northwest European steel mills have concluded their first 2019 deals with automotive buyers at a rollover from this year's prices, following protracted negotiations.

One steelmaker finalised a large deal at stable pricing in the last few days, an executive at the firm said, adding that "it is a fairly good result given the development of the market, but it is a margin squeeze".

But mills hope to secure deals for smaller volumes at slightly higher prices to alleviate that squeeze. They argue that automotive contracts with raw material clauses do not account for the steep increase in costs of high-grade iron ore and direct charge materials. The clauses are based solely on headline 62pc Fe iron ore indices, as well as fob Australia coking coal prices. Increased costs for electrodes and refractories, as well as for some alloys, are not also factored into the agreements.

Headline iron ore indices have been rangebound in the last year but premiums for higher grades have soared, primarily as a result of China's Blue Sky environmental protection drive and supply side constraints.

The automotive deals are an important indicator of coil pricing direction, and have been keenly awaited by many participants across the supply chain. Carmakers had initially pushed for large discounts of up to €60/t ($68/t) compared with this year, with mills aiming for €20-30/t rises.

There was still concern over how automotive demand for steel would develop into next year. Auto order intake is broadly stable for January-February 2019 compared with this year, one mill executive said, but he questioned how this could be the case given the marked slowdown in the sector.

"Mills are probably negotiating automotive contracts for next year and trying to keep prices high somehow," one London-based trader said, referring to high offer prices and the perceived inflated level of some indices.

Stockholders still refer to prices being around €550/t ex-works in northern Europe, but this is above what sellers are quoting and likely reflects the fact that those with inventory do not want to see prices slip and their stock depreciate.

The supply chain appears to be well stocked, and service centre margins are compressing as people look to whittle down inventories.

One mill with strong exposure to a certain carmaker still has surplus fourth quarter material to sell, which is weighing on pricing. And Italian material continues to be offered aggressively into northern Europe, at prices substantially below those northwest European sellers are targeting.

The euro remains weak, as Italy's crisis with the EU appears to deepen and its bonds are sold off rapidly. This is making life tougher for traders, but hot-rolled coil (HRC) is still available at €510/t cfr Antwerp from one trader.

Material is available into southern Europe at below €500/t cfr. There were competitive quotes for Brazilian cold-reduced coil at €615/t delivered service centre, compared with €620-630/t ex-works quotes for domestic material.

There is still belief that the US' Section 232 duty on Turkey will be reduced to the original 25pc, explaining Turkish producers' reduced presence in the European market. One Marmara-based steelmaker has offered into the US at $730/st ddp Houston, contingent on the 232 duty falling to 25pc. Increased clarity over this issue could spur some import activity, one trader said.

News No: 2611
Date: 2018/11/14 - 23:07
News Source: Argus Media

EU  HRC  rollovers  steel  Cfr 


Leave a Comment:


Iranian Spokesman Laments EU’s Delay in Implementing INSTEX

Iranian Foreign Ministry Spokesman Bahram Qassemi took a swipe at the European Union for its delay in implementing the financial mechanism for trade with the Islamic Republic known as the Instrument in Support of Trade Exchanges (INSTEX).

Turkish met coke imports drop after 2017 surge

Turkey's imports of metallurgical coke fell in 2018, following 2017's sharp rise, as the country hiked imports to offset lower domestic output during coke battery upgrades (see chart).

Dutch Look Overseas for Gas

After decades of supplying itself and its European neighbors with natural gas, an era has officially come to an end for the Netherlands.

France Reiterates Support for JCPOA

The Foreign Ministry of France reaffirmed Paris’ commitment to preserving the 2015 Iran nuclear deal and facilitating legal commercial transactions with Iran in defiance of US Vice President Mike Pence who has urged the EU parties to leave the JCPOA.

Hindustan Petroleum Says Could Buy 0.9 Million Tons of Iran Oil

India’s Hindustan Petroleum Corporation Limited could buy 0.9 million tons of Iran oil in its 2018/19 financial year, said Vinod S Shenoy, the company’s director of refineries.

EU Hails Creation of INSTEX, Vows ‘Continued Support’ for JCPOA

The European Union hailed the creation of a new trading system with Iran called INSTEX (Instrument in Support of Trade Exchanges), voicing “continued support” for the 2015 nuclear deal between Tehran and world powers.
Upcoming Events
 Mines & Metals

Mine & Business Today

 Scrap & Recycling


Our partners