EU HRC Market Balances Mills’ Optimism Against Buyers’ Caution After New EU TRQs
HRC offers increased by €10/t to €690-710/t EXW in Northern Europe and to €680-700/t EXW in Southern Europe. Import offers decreased by €10/t to €590-610/t CIF Italy.
Steelmakers across Europe stepped up efforts to raise prices for September and October deliveries following the introduction of the new tariff-rate quota system on July 1. Several producers lifted official offers to €730-740/t EXW, citing stronger orders after the new trade measures came into force.
Market participants said the new safeguard regime had fundamentally changed supply expectations. Service centers and distributors increasingly recognized that reduced import availability could tighten the market in the coming quarters, particularly once existing inventories are depleted. Many now expect the impact of the new rules to become more visible during the fourth quarter rather than immediately.
At the same time, buyers remained cautious. Increasingly high inventory levels, weak end-user demand and the summer holiday season continued to suppress purchasing activity. Many companies reported having sufficient material to cover their requirements through the summer and saw little reason to replenish stocks at current offer levels.
The import market is largely inactive as uncertainty surrounding quota availability makes imports unattractive. Market participants also reported attempts to reroute cargoes and renegotiate delivery terms after the new quota allocations sharply reduced the amount of material eligible for duty-free entry. “Imports have become virtually impossible. It is difficult to predict whether a shipment will fall within the new quota or whether the quota will already have been exhausted by the time it arrives,” an Italian trader told WSD.
WSD Take.
WSD expects HRC prices at €710-730/t EXW NW Europe in July-August, with a jump to €780-800/t in September-November. Import quotas were largely filled within the first days of July, leaving very limited supply flexibility through end-Q3. Import offers are increasingly viewed as unworkable given elevated risks. This leaves buyers with little choice but to turn to EU mills.
So far, we see no tangible ramp-up in EU mill supply. Lead times for flat-rolled products have extended into October, and EU mills are likely to manage supply additions very cautiously through Q3-Q4, mindful of both price pressure and the subdued apparent demand observed in recent months. This could imply that supply may lag demand, providing further support for price recovery.