Germany: During the last week of August, the European Hot-rolled coil prices were broadly stable as manufacturers have started raising offers on surging costs amidst subdued demand dynamics. Market players reported that the transactions for Hot-Rolled Coil in Northern Europe were at USD 700-730 per tonne EXW, but for small volumes. Trading activity in the European region has been sluggish amid persisting overstocking, poor terminal demand, and an ambiguous post-summer price trend. Most buyers in the regional market estimated the workable price for HRC in the region to be USD 700-750 per tonne EXW.

Despite weak market fundamentals, ArcelorMittal increased its quotation offers for coil products, such as Hot-Rolled Coil, and Cold-Rolled Coil, on August 26 in response to rising energy costs throughout Europe. New mill offers for Hot Rolled Coil were being made at USD 800 per tonne ex-works for October delivery and USD 850 per tonne ex-works for November delivery. However, market sources were skeptical of the rise for the time being.

Northern European distributors assert that the price increase is cost-driven rather than demand-driven. Market participants responded differently to the price hike announcement; some players believed the recovery would be impossible due to low demand. European distributors have large coil stocks, which, combined with slow consumer activity, causes a price to fall. Furthermore, German mills had been dragging prices down in recent weeks, attempting to stimulate buying activity with low prices.

ChemAnalyst anticipates that the price increase is requisite because steelmakers have been trading Hot-Rolled Coil at prices close to production costs. European mills had to cut finished steel prices due to rising energy and logistics costs. However, the targeted level of USD 800/MT ex-works is unlikely to be achieved in the medium term. Demand for HRC has also been sluggish in the country due to overstocking and a wait-and-watch attitude among buyers amidst summer maintenance closures.