UK HRC prices fall on weak demand, uncertainty over import safeguard measures

UK steel hot rolled coil (HRC) prices edged lower during the week of Feb. 26 due to soft demand and weaker sentiment in European and Asian HRC markets.

Market sources reported isolated buying interest with some distributers seeking to replenish stock levels for May and June. Despite the slight uptick in purchasing, market sources suggested that UK distributers are generally overstocked with end-use demand described as “poor” with little sign of near-term improvement.

Offers from European mills were generally heard as low as GBP660/mt DDP West Midlands with corresponding bids heard at GBP640/mt.

Offers for non-EU-origin HRC were heard in the range of GBP610-620/mt DDP West Midlands.

Market participants added that ongoing uncertainty surrounding the future of the UK steel safeguard measures on HRC is continuing to weigh on demand.

On Feb. 9 the TRA announced that it would review the suspension of the safeguard import quotas in response to Tata Steel UK’s plan to idle its two blast furnaces later in 2024 and replace them with electric arc furnaces.

A meeting between the TRA and ISTA, the international steel trade association, held in London on Feb. 28 failed to provide any further details about the likely outcome of the review.

At the time of the announcement, the TRA stated that its preliminary view would be to suspend the measure for nine months because Tata Steel is the UK’s sole HRC producer.

According to traders, the current weakness in the UK market has been exacerbated by uncertainty surrounding the measure with many distributers choosing to adopt a wait-and-see approach.

A decision to suspend the measure is likely to increase orders for non-EU HRC which is currently priced approximately GBP50/mt lower than EU-sourced material.

According to one trader, suspension of the measure could turn the UK into a dumping ground for non-EU HRC, resulting in a sharp reduction in prices.

Further price reductions could put significant pressure on UK distributers that purchased material in January with market prices now around GBP50/mt less.

Platts assessed HRC at GBP650/mt ($822/mt) on DDP West Midlands basis Feb. 29, down GBP40/mt from Feb. 22.