UK HRC: Pound strength aggravates price slide

A Brexit-fuelled appreciation of sterling filtered into lower UK hot-rolled coil (HRC) prices this week.

Buyers were targeting below £400/t (€462/t) ddp West Midlands for domestic and EU material, amid import offers at similar levels and slightly lower. Traders suggested under £400/t would be possible for Turkish S275 material, with one saying that most of their recent sales had been below this level.

A northwest European seller had been offering at £415/t ddp around a fortnight ago, but this is likely to have been pulled down by the comparatively stronger pound. Italian-origin HRC was also being offered into the UK of late.

Argus' weekly UK HRC assessment fell by £27.50/t to £405/t ddp West Midlands today.

Some buyers were concerned about signing quarterly contracts given all the uncertainty in the marketplace over Brexit, incoterms and currency, as well as underlying demand levels. Yellow goods producers have eased off in their buying and the automotive market remains weak. As a result, they preferred to buy hand-to-mouth, minimising price risk.

With the service centre market as fiercely competitive as usual, outsell prices have slipped to as low as £450-460/t ddp for processed speed-stock sizes of hot-rolled sheet.

These factors continue to weigh on apparent demand for coils, so most service centres are holding off — offers are getting lower each week, as traders and mills chase business, which also discourages buyers from purchasing. Buyers are in no rush to take material as lead times are so short. A domestic UK producer still has December availability for cold-rolled coil (CRC), and HRC buyers expected to still get early-January arrival even if they booked in a few weeks. One domestic UK mill was aggressively selling non-prime coils into Europe.

Imported CRC was offered as low as £450/t ddp West Midlands from India, with European material available at £460-470/t ddp for DC01. Indian 0.5 Z275 hot-dip galvanised was available at £520/t ddp.

source: Argus Media