EU HRC Market Stalls as Downstream Struggles to Absorb Costs
HRC offers remain at €710-730/t EXW in Northern Europe and €690-710/t EXW in Southern Europe. Import offers into Italy are €530-550/t CIF.
Market sentiment among producers remains relatively firm. Strong order books and expectations of tighter import conditions under the upcoming EU safeguard regime are encouraging mills to prepare for further price increases, particularly for July delivery. Many suppliers are not under pressure to push sales volumes and are instead prioritizing margins, expecting their pricing power to strengthen once the new trade measures become clearer.
In contrast, buyers and downstream manufacturers are adopting a far more cautious stance. At industry gatherings, such as the Tube & Wire trade fair in Düsseldorf, participants point to persistent demand weakness, especially in manufacturing sectors. Uncertainty linked to geopolitical tensions and rising input costs is adding further pressure, limiting visibility and discouraging forward purchasing.
While some service centers are benefiting from improved margins supported by earlier purchases of lower-cost material, this situation is expected to change as inventories are gradually replaced with more expensive coil. As a result, many distributors anticipate increasing difficulty in maintaining profitability, particularly as customers resist higher prices and consumption remains inconsistent. “Service centers already must consider inventory replenishment, but hesitation remains. At some point, the market may face some supply shortage”, a German distributor believes.
The import market continues to provide limited alternatives. Ongoing uncertainty surrounding CBAM costs, coupled with the forthcoming tightening of safeguard quotas, has reduced import activity to a minimum. Only large buyers remain active internationally, often shifting to delivered-duty-paid arrangements to mitigate risk. For most market participants, domestic sourcing remains the primary option despite concerns over price levels.
WSD Take.
WSD forecasts HRC prices in April at €710-740/t NW Europe EXW, with the Q3 target raised to €820- 860/t. EU mills are cautiously increasing supply; this could create a lag in Q3 and lead to supply shortages. Steelmakers are enjoying healthy margins of around €193/t as of early April, vs €180/t of average during fair market of 2017-2018.
TRQ changes could disrupt the current import system, under which exporters currently assume CBAM payment risks. Another challenge for imports is the delay in the release of the country-specific quota volume. It’s increasingly likely that this will not become officially clear until two weeks before July, making it difficult to plan purchases/sales for July.
The market is unlikely to be able to build significant stocks ahead of the tightening of the TRQ system in July, leaving buyers vulnerable during the supply shortages expected in Q3. We see the benchmark for EU prices during that period as roughly the equivalent of the import price including the 50% import duty plus CBAM.