HRC prices have indicated a further slight decline in the EU domestic market ahead of the holiday season, due to lower demand in anticipation of lower prices and increasing pressure from import offers. The general range of prices in the EU market has declined by €10/mt on average in the past week, from the previous levels of €840-940/mt, to €830-930/mt, both ex-works. More specifically, transaction prices are mostly in the €830-850/mt range in the Italian market and in the €890-930/mt range in northern Europe, all ex-works. As reported previously, there is a lack of clarity regarding when consumption from the automotive industry will improve, with most sources excluding a recovery in the first quarter of 2022. On the other hand, increasing costs for energy and transport may help support prices in January. Furthermore, the US-EU tariff-rate quota system that will commence on January 1 is expected to boost European producers' export opportunities, reducing supply pressure domestically to a certain extent.
Meanwhile, cheap import offers are having a negative impact on sentiment in the EU HRC market, although buyers, before placing new orders, are waiting for the volumes currently sitting at ports to be customs-cleared under the first-quarter quotas starting January 1. SteelOrbis has learned of current offers from Asia at around €780-830/mt CFR Italy for deliveries in February and March.
Meanwhile, late last week, the European Commission announced that it has formally started a review of existing steel safeguard measures. This will be concluded by June 2022 and among other things it will take into account the impact of the new trade agreement between the EU and the US.