Hot-rolled steel prices in Europe fell steadily between April and the end of October due to a combination of weak demand, ample inventories at distributors and some pressure from competitive imports. In an effort to balance supply and demand, mills across the EU shut down blast furnaces, providing some support to coil prices.
Domestic HRC prices hit a 2023 peak in April at a high of 860, according to S&P Global Commodity Insights euros per ton. The price subsequently fell to its lowest level of the year at 605 euros per tonne on October 13.
According to S&P analysts, there are some downside risks to hot rolled coil prices in Europe in the first half of 2024 due to a lack of real demand and increasing supplies.
Additional supplies are expected to hit the market as furnaces restart, while actual demand is expected to remain at current low levels, market participants say.
Earlier production cuts led to longer lead times, which contributed to rising coil prices.
Buyers are holding off on stockpiling due to prevailing uncertainty about the sustainability of the price trend. And while this approach has limited any increase in apparent demand, some sources also said it will keep demand more resilient as distributors will have to replenish inventory sooner.
Most market sources remain concerned that demand is unlikely to will be strong enough to support prices in the first quarter, while consumption sentiment has become somewhat more optimistic. As a result, sources say, the price recovery is unlikely to last until the first half of 2024.
And while some market participants predict mills will adjust production rates to balance demand and support domestic coil prices, all more sources are concerned about the impact on the market of a possible end to protective measures.
Since 2018, the EU has had protective measures in the form of tariff quotas on imports of finished steel. Concerns have grown that the EU will have to lift the measures in mid-2024, as it may have to pay compensation to affected exporters.
Several factory sources said the EU market needed protection from imports. if this guarantee is terminated before the Carbon Border Facility comes into force in 2026 to equalize carbon costs between exporters and EU factories.
Most market sources said they expected new anti-dumping rules to be opened affairs in the EU.
