European HRC market digests potential safeguards’ effect on domestic prices

The European steel hot-rolled coil market was broadly stable on Friday May 31, with hopes of a price recovery emerging on expectations of lower imports from Asia after new safeguard adjustments were announced, sources have told Fastmarkets.

Buying activity in the spot HRC market in Europe remained subdued during the week to Friday, with only minimal tonnages purchased.

“The market is still cautious and quiet. Plus, Germany is off on May 30-31 so nothing has been going on in terms of trading,” one German buyer told Fastmarkets.

Offers of July-delivery HRC from integrated steelmakers in Germany were heard around €630-650 ($682-703) per tonne ex-works on Friday, with transactions mainly heard at the lower end of the range.

Sources pointed out that some €10-15-per-tonne discounts were possible in cases of firm bids.

An integrated mill in the Benelux area was targeting €640-650 per tonne ex-works.

Buyers estimated tradeable values at €620-640 per tonne ex-works.

Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €633.96 per tonne on Friday, up by €0.21 per tonne day on day from €633.75 per tonne.

The index was down by €3.41 per tonne week on week, but up by €1.96 per tonne month on month.

Market sentiment improved following Thursday’s development around steel safeguard measures.

On May 30, the European Commission notified the World Trade Organization that safeguard measures would be extended for two more years, Fastmarkets reported. The Commission also suggested a 15% cap per single country over the residual HRC quota volume, which flustered the EU steel market.

Notably, sources expect the new adjustment to significantly limit HRC imports from Asian suppliers, who are offering the most competitive prices, and reshuffle import trade flows into Europe.

“Adjusted safeguards close the opportunity to negotiate new [HRC] deliveries from Taiwan, Vietnam and Japan for the next few months,” one Italian distributor told Fastmarkets.

“Not to mention that we have around 500,000-600,000 tonnes of HRC of these origins in the pipeline – already ordered, in transition or in production phase. That means when those volumes arrive, we will either have to pay a safeguard duty, or custom clear only part of the tonnages, creating massive stockpiling in port,” the distributor said.

“The [European steel] market is now only digesting the news, but it is clear the import structure will change. Turkish mills have already taken their position to export to the EU,” a buyer in the Benelux region said.

In May, Turkish HRC suppliers became more active in the European market, with sales reported at €600-610 per tonne CFR including the anti-dumping duty. Offers were heard at €610-620 per tonne CFR including the duty.

“Turkish mills have quick shipment versus Asians and no problem with quotas,” a second Italian distributor said.

“In fact, Turkish HRC quotas are chronically underutilized, but that is likely to change as soon as adjusted safeguards come into force,” he added.

The quarterly allocation for Turkish HRC under EU safeguards was 464,083 for the second quarter of 2024, according to EU customs data.

The total available allocation is 1.28 million tonnes, including the transferred amount of unused volumes from previous periods.

In general, sources suggested that reduced availability of cheap imports could potentially support a rebound in domestic HRC prices the medium term.

Meanwhile, in Southern Europe, Fastmarkets’ daily steel HRC index, domestic, exw Italy was calculated at €630.00 per tonne on Friday, unchanged since May 24.

The index was down by €3.33 per tonne week on week, but up by €2.75 per tonne month on month.

There were no major price changes heard in the Italian HRC market on Friday.

July-delivery HRC was offered by one local and one European supplier to the nation at €650 per tonne delivered, which nets back to about €630-635 per tonne ex-works.

Buyer estimates of tradeable values were heard at €620-630 per tonne ex-works, but the lower end was not considered workable by an Italian supplier.

“In Italy, domestic [HRC] supply is pretty much limited to one mill; with cheaper imports from Asia becoming unavailable due to the new safeguards, I see no reason for European mills to step back,” a buyer in Italy said.