ArcelorMittal has started to give offers to buyers at €1,250/ton for cold rolled coil and €1,300/ton for hot dip galvanized (HDG). The company noted low spot availability to buyers as it focuses on contracts and traditional customers, pointing to high levels of uncertainty in the market.
In addition to the decrease in supply from Ukraine and Metinvest, another factor driving the increase was cost increase. These countries sold around 2.6 million tons of HRC to the EU last year and represented more than 28 percent of the import market. Central and eastern European production is also likely to be interrupted as some producers in the region rely on Ukrainian and Russian iron ore and coal.
CIS shipments to Turkey, an important supplier to Europe, will also likely be interrupted. Metinvest alone sold almost 1 million tons of HRC to Turkey last year. While the company is declaring force majeure today, most market participants argue that Russian supplies are currently off the table due to disruption at ports and the reluctance of some banks to finance products from the country. Yesterday, Severstal's head, Alexey Mordashov, was sanctioned by the European Union.
Russian materials can still technically be sold to Europe, but there will most likely not be any flow at this time.
Slab will tighten as one of Europe's leading manufacturers seeks outsourcing. Metinvest sold more than 1.5 million tons of slabs to Italian rolling mills last year. Russian manufacturers are major suppliers of the trade market.
Today, an Italian rolling mill increased its HDG offer by €200/ton, while another mill in the country increased its HDG offer by €100/ton.
CME Group's Northern Europe HRC contract rose in response to the news. Prices for March increased by €24/ton daily to €1,079/ton, while in April they increased by the same amount to €1,104/ton. Earlier in the day, March traded at €1,040/ton in March and at €1,065/ton in April.
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