EU HRC Prices Gain Support from Tight Supply and Rising Costs
HRC offers rose by €5/t to €720–740/t EXW in Northern Europe and €710–730/t EXW in Southern Europe, while import offers into Italy remained unchanged at €580–600/t CIF.
The mood among European producers has become increasingly bullish. Mills see several factors working simultaneously in their favor, including tighter domestic availability, reduced import competition and rising production costs. ArcelorMittal was reported to have raised HRC prices by another €20/t, targeting €770/t delivered in Northern Europe and €790/t delivered in Southern Europe for November lead times. Southern European offers typically carry a premium to the North, driven mainly by tighter import restrictions and disproportionate energy cost pressure rather than freight alone.
Premium hard coking coal reached $279.50/t FOB Australia on Sept. 7, up $66.50/t since Aug. 4. Higher coal prices, together with increased energy, gas and carbon costs, have intensified cost pressure on blast-furnace producers. This has strengthened mills’ determination to defend higher offers even as actual transaction volumes remain limited.
Buyers remain more cautious. Although more customers returned to the market after the summer break, many continued to seek material at August price levels and showed little willingness to follow mills’ latest increases. High inventories among some customers and persistently weak end-user demand are supporting this resistance. As a result, the market still shows a gap between mills’ offers and the prices buyers are willing to accept. “Buyers have returned to the market, but they need some time to assess the situation. For now, they are still hesitant to make purchasing decisions,” a German trader said.
Service centers and traders also face a difficult choice. They recognize that supply conditions have tightened and that waiting too long could leave them exposed to even higher replacement costs later in the fourth quarter. At the same time, weak downstream demand makes it difficult to pass higher coil prices on to customers. This is limiting aggressive restocking and keeping spot trading relatively subdued despite the more bullish supply environment.
On a DDP basis, imported material was available at around €710–750/t, depending on origin, significantly narrowing its advantage over European coil. At the same time, uncertainty over safeguard quota utilization after the next quota period opens on Oct. 1, together with CBAM costs and existing trade defense duties, has made overseas bookings difficult to price. As a result, buyers are choosing domestic material even when headline import offers appear cheaper.
WSD Take.
WSD projects EU HRC prices at €740–760/t EXW NW Europe for September, with a further jump to €780–800/t anticipated over October–November. The market navigated July–August with moderate destocking, but the impact of reduced imports will be acutely felt in September, when a supply deficit could emerge. Inventory dynamics in Q2 did not provide buyers with a meaningful buffer, as many preferred to avoid risk rather than build inventories.
Domestic supply is now the key driver of EU pricing. To achieve neutral inventory dynamics in Q3, domestic output would need to grow by 15% y/y — a scenario we consider highly unlikely. Any output increase in September and Q4 would require higher utilization rates, which in turn would strengthen mills’ push for improved margins. The surge in coal and energy prices has already eroded margins in early September to €188/t from €205/t in August, compared with the historical average of €180/t. A €30/t increase in EU steel prices from current levels is therefore justified to restore margin sustainability.