EU HRC Market Holds Steady as Mills Bet on Trade Barriers While Buyers Wait for Demand Recovery
HRC offers remained at €680-700/t EXW in Northern Europe and €670-690/t EXW in Southern Europe. Import offers rose €10/t to €600-620/t CIF Italy.
In practice, producers are focused on filling summer production schedules and appear to demonstrate some flexibility on pricing. Buyers remain defensive, pointing to high inventories and weak demand from key consuming sectors. Many service centers report sufficient stocks until September or even October, eliminating any immediate need for restocking.
Producers view the upcoming EU trade regime, scheduled to take effect on July 1, as a potential catalyst for higher prices later in the year. The new system is expected to reduce steel import quotas by around 47% and raise out of quota duties to 50%, although country-specific allocations have not yet been announced.
This regulatory uncertainty has also weighed significantly on import activity. Buyers remain reluctant to commit to overseas purchases until the final quota distribution becomes clear. While Turkish, Algerian and Asian suppliers continue to offer competitive material, concerns over quota availability and CBAM-related costs have limited transactions.
Opinions differ regarding the eventual impact of the new trade measures. Some market participants expect imports from competitive origins to continue flowing into Europe, limiting the effect on domestic prices. Others believe tighter quotas will force buyers back to EU suppliers, tightening supply and supporting a price increase in the second half of the year. “The market has learned how to deal with CBAM. I expect a similar adjustment process with the new TRQ regime. Market participants will need time to adapt and redirect trade flows accordingly”, an Italian trader believes.
WSD Take.
TRQ-exempt imports will likely allow buyers to build up to 3Mt of inventories from Q4 2025 through Q2 2026. That is likely sufficient to cushion the impact of reduced imports in July-August. Therefore, the main consequences of tighter supply due to stricter TRQs may only appear in September-November, and buyers are seeking to avoid risk by building inventories that far out. In turn, this allows buyers to pause and exert downward pressure on prices at present. According to market rumors, EU mills have unsold volumes through late June.
Given the current market softening, HRC price levels at the end of May may be lower, yet still above current prices – €710/t EXW NW Europe, with subsequent growth to €780-820/t in Q3. Current steelmaking margins for domestic producers are below historical averages, so the incentive to ramp up supply is limited, while import prices are unattractive at current levels. This sets the stage for a sharper price increase for Q3 deliveries.