EU HRC Market Stays Quiet in August while Mills Bet on Post-Summer Upside
HRC offers remained unchanged at €700–720/t EXW in Northern Europe and €690–710/t EXW in Southern Europe, while import offers into Italy declined by €10/t to €570–590/t CIF.
Mills appear comfortable with current order books and are increasingly focused on September and October business rather than attempting to generate additional volumes during August. Producers also remain relatively optimistic about the post-summer outlook: their confidence is based primarily on tighter import availability following the introduction of the EU’s new tariff-rate quotas in July, the impact of CBAM and expectations that buyers will eventually need to replenish inventories.
At the same time, buyers and distributors remain considerably more skeptical. Service centers report little incentive to restock while downstream demand remains weak and existing inventories are sufficient. Although the lower price levels seen in June have largely disappeared, distributors say the latest mill offers cannot yet be passed through to customers. As a result, most buyers are maintaining a defensive procurement strategy and waiting for inventories to decline before returning for larger volumes.
The summer lull has therefore interrupted the upward momentum generated by the introduction of the new trade regime. Although most participants acknowledge that import restrictions have structurally strengthened European mills’ position, buyers see little reason for an immediate price increase while steel consumption remains subdued. Many expect the first meaningful test of mills’ pricing power to come at the end of August or in September, when companies return from holiday and begin assessing fourth-quarter requirements.
Import activity remains virtually absent. Buyers rely on European mills, although significant volumes of previously imported material remain at ports and warehouses and could delay the full impact of the new trade restrictions until September or October. “Buyers need time to return to the market. Once purchasing activity resumes, we are likely to see the next price move,” a German trader said.
WSD Take.
WSD expects HRC prices at €720–730/t EXW Northwest Europe in August, with a jump to €760–800/t in September–November. Current steelmaking margins have risen to €217/t, already well above the historical average of €180/t. This improvement could incentivize local steelmakers to ramp up supply. However, achieving ArcelorMittal’s planned output target of maintaining Q3 volumes at Q2 levels is highly unlikely given logistics constraints (low river water levels).
In the coming weeks, prices in Northwest Europe are likely to gain up to €20/t, driven by higher transport costs following the disruption of normal river shipping. Prices in Southern Europe are set to move higher toward Northwest European levels, reflecting greater dependence on intra-EU imports following the ADI (Taranto) shutdown.
Inventory dynamics in Q2 were broadly neutral, preventing a buildup of excessive inventories, with the possible exception of the HRC segment. The import shortfall is likely to become acute in September. Domestic pricing may continue to be benchmarked against import prices. But while import prices may move lower, the tight quota regime means that Asian import prices will no longer define the import parity price — instead, the average import price should be used with a 30–50% premium to CIF prices to account for risk.