The German Hot Rolled Coil (HRC) market showed notable strength in early February 2025, with prices increased in the first week, followed by another increase in the second week. This upward momentum comes amid tightening supply conditions and renewed buying activity in Northern Europe, despite persistent economic challenges.

Key Market Developments:

• HRC prices in Germany increased 2.9% in first week of February, followed by 0.7% rise
• Major producers report being sold out for Q1 deliveries
• EU trade measures creating uncertainty around imports
• Automotive sector providing moderate demand support
• ArcelorMittal announces €30 per ton price increase for April deliveries

The HRC market's positive trajectory is primarily driven by a combination of supply-side constraints and strategic trade measures. Major steel producers report strong order books, with first-quarter delivery slots already filled, prompting higher target prices for April deliveries. The market dynamics are further complicated by ongoing reviews of EU steel safeguard measures, which have created uncertainty around import availability.

Trading activity in the German HRC market shows mixed signals, with buyers estimating tradeable values within specific ranges below producers' highest offers. While transaction volumes remain modest, the Northern European index has strengthened, supported by improved purchasing activity and limited import options. This trend reflects a growing preference for domestic sourcing amid potential import shortages later in the year.

The supply landscape for HRC remains relatively tight, with major producers experiencing extended lead times. The situation is exacerbated by ArcelorMittal's planned price increase and the European Commission's anti-dumping investigation concerning HRC imports from several countries. These factors have contributed to a more cautious approach from international suppliers, further supporting domestic price levels.

Regional analysis reveals contrasting patterns between Northern and Southern Europe. While German HRC prices have shown consistent increases, Southern European markets, particularly Italy, display more variable pricing dynamics. Local buyers in Italy report adequate inventory levels, suggesting less immediate purchasing urgency compared to their Northern European counterparts.

The demand picture for HRC remains complex, with sector-specific variations. The automotive industry, projected to see slight growth in German production for 2025, provides moderate support for HRC demand. However, the construction sector continues to face headwinds due to declining real estate activity and broader economic challenges. Manufacturing data shows some improvement, with January recording the slowest decline in output and new orders.

As per ChemAnalyst, the outlook for the HRC market through 2025 remains cautiously optimistic, supported by Eurofer's forecast of a 2.2% recovery in EU apparent steel consumption. However, this recovery faces potential headwinds from ongoing economic challenges, particularly inflation and energy price fluctuations. The market's trajectory will largely depend on the implementation of EU trade measures, the resolution of anti-dumping investigations, and the broader economic recovery. While supply-side constraints currently support prices, the sustainability of recent increases will ultimately depend on demand recovery across key end-use sectors and the stabilization of import dynamics.