German Hot Rolled Coil (HRC) Market Shows Modest Increase Amid Mixed Market Signals

The Hot Rolled Coil (HRC) market in Germany demonstrated resilience in October 2024, with domestic prices showing modest gains following the Euroblech Hannover steel fair. Several German mills have raised their HRC offer levels, responding to a combination of market factors including potential production cuts and shifting import dynamics.

In the fourth week of October, HRC prices in the German spot market recorded a marginal increase of 0.6%, in the previous week. This upward movement in prices reflects the market's response to mills' increased offer levels and growing concerns about future supply constraints.

The market outlook has been particularly influenced by reports of a major European producer potentially reducing production capacity by temporarily shuttering blast furnace operations in early 2025. This anticipated reduction in HRC supply, coupled with elevated import prices, has created a supportive environment for domestic spot market prices. Northwest European HRC market assessments indicate offers trending above typical levels, though some lower-priced bids continue to face rejection.

Import dynamics for HRC have shifted significantly, with the traditional price differential between imported and domestic narrowing considerably. In some instances, import HRC prices have exceeded local offers, creating an unusual market scenario that has strengthened domestic producers' position. This development has particularly impacted Northwest European trading patterns, while Southern European markets maintain relative stability.

Despite full order books through year-end, the spot market activity remains constrained by subdued automotive sector demand. Service centres handling HRC are operating below capacity, facing challenges in workload management. The situation is further complicated by strict safeguard quotas and ongoing anti-dumping investigations, which have left many import negotiations unresolved due to concerns over potential duty implications.

The broader European HRC market experienced disruption when ArcelorMittal implemented significant price increases. While market participants await the full impact of these adjustments, cautiously optimistic signals from Chinese authorities have led to speculation about potential further price increases, though immediate effects remain uncertain.

As per ChemAnalyst, HRC prices in Germany are expected to maintain their upward trajectory through the remainder of 2024, with potential for further increases in Q1 2025. This forecast is based on several factors, including the anticipated production cuts, strengthening import prices, and possible improvement in automotive sector demand. However, the extent of price appreciation will likely be moderated by ongoing market uncertainties and cautious buyer sentiment. The analysts project HRC prices could see an additional increase by year-end, contingent upon the materialization of expected supply tightness and any significant shifts in automotive sector demand patterns.