Europe expects steel prices to decline as large exporters run out of quotas

The European steel market is grappling with cheaper Indian hot rolled coil flows, with the July-September quota balance of 169,717 tonnes already exhausted and material that was once in the port is now being distributed to buyers, according to data from the European Commission from July 13.

According to one European source, HRC imports from India were 1,000 euros per tonne of CIF Italy Ports.

“Most of the European factories are fully booked, there are not many deals outside of contracts,” the source said. “There is very little space here. Some are in positions with Indian imports. Despite the duty, prices are still good. ”

After the EC's decision to extend safeguards was announced in early July, imports reserved in April and May have now entered the market, resulting in a temporary drop in prices for HRC prices in Italy.

“The main place where we are seeing a decline in prices is Italy,” said a source at the plant. “Everyone is waiting for a price cut in September. We are on a wait and see basis. Now more material is taken from imports, but it is still not enough, not for all products. "

Since early June, Italian HRC prices have dropped from € 30 /t to € 1,100 /t from the Ruhr area.

HRC imports also came to the EU from Russia: € 1,100 per tonne went to CIF Antwerp, despite a 15% export duty applied to Russian exports.

“I see more accessibility thanks to imports, so I think we are in a resolved situation with factories. When you have offers to import, we have other options, ”said the buyer. “We are negotiating and using imports to make domestic prices cheaper. This will put pressure on prices in Europe. "

Russia's quota of 416,848 tons is currently 354,284 tons, or 85%, of which 18,455,864 tons are awaiting distribution in European ports. According to the data, the balance of quotas for Turkey is currently 26 1,820 tons out of an initial volume of 330,388 tons.

While the market does expect some softening over the summer, sources insisted that prices will rise when customers return from summer vacation.

Despite the influx of cheaper imports, sources said a sharp correction is unlikely given high US steel prices, the removal of the Chinese steel tax credit, and the chronic lack of supply in Europe.

“Higher sales are possible, especially if you provide affordability,” said a source at a factory in Italy.