EU HRC Market Weakens as Buyers Step Back Ahead of Summer
HRC offers decreased by €10/t to €700-720/t EXW in Northern Europe and remained at €690-710/t EXW in Southern Europe. Import offers into Italy rose €10/t to €590-610/t CIF.
The mood among service centers and distributors has become notably cautious. Many buyers report sufficient inventories and little urgency to replenish stocks, particularly as downstream demand from manufacturing sectors remains subdued. Expectations for seasonal slowing during the summer months have further reduced appetite for forward purchases.
Some integrated mills no longer offer June material because of full order books, while others accept prices at the lower end of the range. Market participants increasingly described the market as stagnant, with negotiations limited and buying activity concentrated on small-volume gap-filling purchases. “Service centers are also trying to keep business moving and have started offering small discounts to stimulate demand, although the measures have done little to change the market situation”, a German distributor informed WSD.
Import activity remains limited despite softer overseas prices. Turkish material continues to attract some interest because of shorter lead times and relatively manageable CBAM exposure, but buyers generally maintain a highly cautious approach. Asian offers remain scarce due to logistical disruptions linked to tensions in the Middle East, elevated freight rates and continued uncertainty surrounding CBAM-related costs.
WSD Take.
Current market behavior is likely mirroring Q4 dynamics, when we saw substantial imports from TRQ exempt origins, particularly in the final month of the quarter. We believe that import inflow in April was likely stronger than the 20% y/y we see under the TRQ alone because of active Asian TRQ-exempt deliveries.
However, import prices are relatively high — imports offer an arbitrage margin of only €50-60/t, including CBAM. This price level is only justifiable based on the expectation of further gains in Q3. The delay in publishing country specific TRQ allocations makes normal import planning impossible; as such, interest in imports for Q3 may be limited.
WSD forecasts HRC prices in May at €700-730/t NW Europe EXW, with the Q3 target of €780-820/t. The import price with 50% import duty paid will likely establish the benchmark that EU prices will gravitate towards after the TRQ update. But the transition to new price levels may be smooth and gradual, given active imports especially if buyers are able to build inventories.