Global View on HRC: Market evaluates EU CSQ impacts, some suppliers rethink strategies

This week, the country-specific quota (CSQ) mechanism announced by the EU on June 30, just a day before the new quota period was due to start, became the hottest topic in the global HRC market. In the EU itself, while players were mostly trying to understand the details and to evaluate the short- and mid-term consequences, many had to handle immediate issues regarding third quarter quota clearances, as well as dealing with HRC cargoes of origins which were deprived of EU individual quotas or which received very limited tonnages. With many opinions and estimations being voiced, sources agree that, although the market has to settle and new import negotiations will not begin immediately, most of them do not doubt that local prices in the EU will increase next week. In Asia, while the main HRC exporters from the region have also been evaluating their positions according to the EU CSQs, the price trend in China has been downward, as well as import HRC pricing in Southeast Asia overall, mainly due to seasonally subdued demand.

In the EU, the CSQ announcement indicated a cut of the HRC import quota from 7.7 million mt to 5.5 million mt, triggering a lot of discussions in the market. Many traders have reported issues with HRC clearances at ports due to quota limits, but also connected with having material in hand with no quota for a certain origin. Algeria and Malaysia being cut out of the quota in the EU came as a surprise to many, although officially the decision was mainly based on the evaluation period being 2022-24, while both countries started actively selling their HRC to the EU in 2025. While the market is expected to settle in the coming two weeks, followed by the seasonal holiday period, most European sources expect the local HRC prices in Europe to officially go up. Even this week some mills have been refusing low bids, while some were voicing €10/mt higher targets. In Italy, some expectations have been voiced at €705-720/mt ex-works, but not yet officially. In Spain, some of the indications have been reported at as high as €730/mt delivered, while in the northern part of the EU sources reported €720-730/mt ex-works target levels. In imports, some of the CFR offers stood at $575-630/mt CFR, with the upper end marking ex-India price ideas, and the lower end indicating the prices from Turkey.

In Turkey, HRC prices have decreased over the past week from $615-625/mt to $605-615/mt ex-works for August and September deliveries. Large buyers are aiming for $585-590/mt ex-works from now on, and maybe even lower, while seeing the difficult situation faced by Turkish mills following the EU’s announcement of country-specific quotas (CSQs). As for exports, Turkish mills are officially trying to maintain $600-610/mt FOB offers for August-September shipments, but the reality is closer to $590-595/mt FOB. However, some bids from Europe, which are not considered firm under the current market conditions, have been reported at $560-570/mt FOB. In the import segment, Turkey has been receiving offers mainly from China, at $532-537/mt CFR and up to $540/mt CFR, down around $10/mt over the past week. Not much interest is seen now since market players are trying to evaluate import prospects in view of the impact of the EU’s CSQs.

Russia remains out of the export market, enjoying higher workable prices in its domestic market and in nearby CIS countries. The latest deals in the domestic market for HRS in Russia have been reported at RUB 61,000/mt ($645/mt) CPT for thin material, while thick and wide sheets have been sold at up to RUB 65,000/mt ($687/mt) CPT. The trade from Russia to Iran has been slower lately, with the workable prices at $550-570/mt FOB, with this trade not being of top priority for Russian mills. The estimated workable prices for ex-Russia exports to the MENA region and Turkey are at $540/mt FOB for non-sanctioned material and at close to $500-505/mt FOB for sanctioned material. From the Baltic Sea, workable HRC prices from Russia are estimated at $490-500/mt FOB for sanctioned material.

In North Africa, local official prices for HRC in Egypt and Algeria are at DZD 110,000/mt ($695/mt) and EGP 40,000/mt ($714/mt), both ex-works, respectively. Now when the EU has officially cut its quota for HRC, effectively cutting off Algeria, domestic workable prices in this country may soften, especially for government projects. As regards exports, Egypt has not been very active this week but its expected export level is around $610-615/mt FOB, while Algeria has dropped its price for the MENA and African regions by $10/mt to $620/mt FOB officially, though discounts are applicable.

Chinese HRC exporters have remained aggressive and have continued to cut offer prices over the past week, trying to accelerate sales. Large Chinese mills have been offering boron-added SS400 HRC at $500-505/mt FOB this week, and the week has finished at $500-503/mt FOB. This price level has been discussed in negotiations with the Middle East, though there has been no information about large-size contracts having been done yet. The price level for small mills and traders has declined by $7.5/mt from last week to $486-490/mt FOB, with prices corrected down in two rounds, and this level has been widely available on Friday, July 3. The latest offer price level for Q195/SS400 HRC in Pakistan has been reported at $515/mt CFR, with some limited trading activity seen at $512-513/mt CFR, down from the previous bookings at $520-523/mt CFR in this destination. All the low prices from small mills and traders are inclusive of VAT, as non-VAT trading has still been close to almost zero and sellers are only trying to fulfill the commitments under earlier signed contracts.

This week, Chinese export prices have been moving in line with the local market, where prices have retreated by an average of RMB 40/mt or $6/mt. This is happening mainly due to low demand, better iron ore prices, and still high production, even despite repairs at some mills.

Weak demand and the drop in import HRC prices have resulted in a $34/mt drop in local HRC prices in Vietnam, as announced by major Vietnamese mill Hoa Phat Group. Hoa Phat’s prices for non-skin passed SAE1006 and SS400 HRC have settled at VND 14,460-14,490/mt ($549-550/mt) CIF (excluding VAT). The pace of the decline has increased from a mild decline of $13-14/mt in the previous month. 

Moreover, a few new bookings were reported in Vietnam’s import HRC market after Hoa Phat’s announcement, with lower prices confirmed. Some tonnages (not less than 20,000 mt) were sold by the Indonesian mill to Vietnam at $543/mt CFR for a mix of SAE1006 and SS400. The Indonesian producer had not been active in the week before then, waiting to hear local HRC prices in Vietnam first. This price has been assessed as competitive, considering Hoa Phat’s official levels at $549-550/mt CIF. Also, there have been a few deals for Indian coils done at $535/mt CFR Vietnam, as confirmed by sources.

Among Indian HRC exporters HRC, sentiments have also been generally negative with no improvement in demand locally and stable domestic prices, as well as tough competition in Southeast Asia and the Middle East. The lowest deal price was at $535/mt CFR to Vietnam, which translates to $505/mt FOB or so. As for the GCC market, the latest confirmed deal was at $540/mt FOB as reported last week, and most mills are trying to hold offers stable, but negotiations can be held at lower levels down to $525-530/mt FOB. But the recent attempts of European producers to increase prices as well as the limited quotas have resulted in some increase in indicative levels for Indian coils to this destination. Offers for Indian HRC have been reported at as high as €620/mt CFR southern Europe, but this level has been considered as a test price after the recent announcement of new tariffs. And Indian mills may adjust to €600/mt CFR or below, trying to accelerate sales. For now, indicative levels for ex-India HRC to Europe have been assessed at $595-600/mt FOB, versus $580/mt FOB as in previous deals done almost a month ago.

In the GCC, a downward trend has become more evident in the import HRC market this week, mainly due to aggressive Chinese indications and weak buying appetite during the summer period. Buyers are still following the market for possible bookings, but most negotiations are now being shaped around lower price ideas. Chinese SS400 HRC offers for late August and September shipments are now heard at $540-550/mt CFR GCC, compared with $560-570/mt CFR Saudi Arabia and $580-585/mt CFR UAE last week, while higher offers at $570-585/mt CFR are finding little support. Indian traders’ indications have also moved lower to $525-530/mt FOB, or around $575-580/mt CFR UAE, from last week’s workable level of about $585/mt CFR UAE. In contrast, Indian mills are still targeting $540-550/mt FOB, equivalent to $590-600/mt CFR UAE, while offers to Jeddah remain higher at $620-630/mt CFR. Market participants say these Saudi Arabian levels are difficult to match with the more competitive UAE indications and traders’ prices.

*- price announced by Hoa Phat, while Formosa will announce its new quotations next week

**- comparison is weekly, while on monthly basis Hoa Phat price is down by $34/mt

***- lower end went down by $10/mt, but higher end increased indicatively by $15/mt