European domestic hot rolled coil prices have continued to move upward this week, supported by improving trading activity and gradual restocking across the region. Mills in northern Europe have maintained firm offers while pushing for further increases, amid tightening spot availability and persistent uncertainty surrounding imports. At the same time, the war in the Middle East has added volatility to the energy and freight markets, with market participants not ruling out further support for domestic HRC prices due to increasing production and import costs in the coming weeks.
Most local HRC prices from mills in northern Europe, mainly for May delivery, have been estimated at €685-705/mt ex-works, up by €5/mt on the higher end of the range week on week. At the same time, according to sources, trade activity has continued improving, with a number of transactions reported at mainly €670-680/mt ex-works levels, though a few deals have also been reported by one of the leading EU producers at €700/mt ex-works. Thus, the tradable price levels have settled at €670-700/mt ex-works, versus €650-660/mt ex-works last week.
In Italy, offers from mills are estimated at €685/mt ex-works for April delivery, up by €5/mt week on week, and at around €700/mt ex-works for delivery in May, the same as last week. Meanwhile, the tradable price level is estimated at €670-680/mt ex-works, versus €650-670/mt ex-works last week.
According to sources, the war in the Middle East has also affected European energy markets. Gas prices rose sharply in early March amid concerns over potential supply disruptions in the Strait of Hormuz. Market participants noted that the surge in gas prices could translate into higher production costs for European steelmakers, given the energy-intensive nature of steelmaking and downstream processing such as hot rolling. Rising energy costs are therefore expected to provide additional support for domestic hot rolled coil prices in the near term, particularly at a time when mills are already attempting to push through higher offers.
“Heightened geopolitical risks and volatility in energy markets could further tighten supply conditions if producers adjust output in response to higher operating costs. In such a scenario, European buyers may face increased price pressure for flat steel products, including HRC,” a market insider said.
In the import segment, indicative offer prices for HRC have remained at €525-565/mt CFR, the same as last week, with the lower end of the range corresponding to ex-India HRC offers. Offers for ex-Turkey HRC have been voiced at around €550-560/mt CFR, duty paid, but excluding CBAM costs.
As SteelOrbis also reported last week, Turkish suppliers have continued to succeed in negotiations with European buyers, having sold a large volume of about 50,000 mt in total of HRC at around $590/mt FOB and at $630/mt effective FOB, which translates to around €545/mt CFR and €570-580/mt CFR southern Europe, respectively, for the third quarter quota period.
Meanwhile, HRC import offers including CBAM costs on DDP basis have been mainly voiced at €630-660/mt, compared to €630-670/mt DDP last week. According to a number of sources, some second quarter shipments from Saudi Arabia, Turkey and North Africa have already been taken by traders, who are currently offering the volumes to medium-sized buyers at around €640-650/mt DDP or above, though offers have been extremely rare in the market this week.
At the same time, it is worth mentioning that disruptions to global shipping routes have added further uncertainty to supply chains. Several major container shipping lines including Maersk, MSC, Hapag-Lloyd and CMA CGM have suspended vessel transits through the Suez Canal and the Red Sea corridor, redirecting ships instead around the Cape of Good Hope. “The longer route could add roughly two weeks to transit times for cargo traveling from Asia to Europe. The detours are also expected to increase freight costs due to higher fuel consumption and reduced vessel availability, potentially making imported steel less competitive in the European market,” a market insider told SteelOrbis.