German HRC Market Sees Modest Growth as Mills Target Price Hikes for Q1 2025

The Hot Rolled Coil (HRC) market in Germany demonstrates modest growth as major European producers aim for significant price increases in the first quarter of 2025, despite current consumption challenges. Northern European HRC producers are actively offering material for January delivery, though these elevated price levels have yet to secure firm commitments from buyers.

For the week ending November 1st, HRC prices in the German spot market registered a slight increase of 0.9%, from the previous week. This upward movement in prices reflects mills' determination to strengthen their position ahead of long-term contract negotiations.

December delivery transactions for HRC continue to see mills offering discounts in the fourth quarter, though the Northern European market index shows modest gains. The pricing strategy appears largely driven by upcoming negotiations with end users, particularly in the automotive sector, where Original Equipment Manufacturers (OEMs) are pushing for substantial HRC price reductions that suppliers consider unsustainable.

Import dynamics have significantly influenced the domestic HRC market, with Turkish and Asian offers currently viewed as uncompetitive. German buyers note that imported HRC carries additional risks due to ongoing anti-dumping investigations by the European Commission. This situation has strengthened domestic producers' position in the market, despite relatively weak demand conditions.

The distribution sector's approach to HRC inventory management remains conservative, with stockholders carefully aligning their stocks with anticipated market weakness. This cautious stance reflects broader market sentiment, though there's a notable shift in price expectations. Some market participants anticipate HRC price stabilization or modest increases, marking a change from previous months' predominantly bearish outlook.

Current HRC spot market trading activity remains limited, with mills maintaining firm offers for Q1 2025 deliveries significantly above present transaction levels. While buyers express scepticism about the sustainability of these higher HRC price targets, citing persistent weak demand, suppliers remain committed to their pricing strategy, particularly considering potential anti-dumping measures affecting import competition.

As per ChemAnalyst, HRC prices in Germany are expected to maintain their upward trajectory through the remainder of 2024 and into early 2025, with potential for more substantial increases once new contracts are negotiated. Analysts project that HRC prices could see an additional slight increase by year-end, driven by mills' determination to improve margins and the possibility of trade measures affecting import competition. However, the success of these price initiatives will largely depend on demand recovery, particularly from the automotive sector, and the broader economic conditions in the European market. The ongoing monitoring of imports by the European Commission could provide additional support for domestic HRC prices in the coming months.