The Hot Rolled Coil (HRC) markets in Germany and the United States demonstrate positive momentum as manufacturers maintain strong positions amid improving market conditions and robust mill utilization rates. Market participants report strengthening sentiment supported by increased scrap prices and extended lead times.

Key Takeaways

• Mills report strong order books for Q1
• Domestic buyers showing preference for local supply
• Scrap prices supporting upward momentum
• US mill utilization rate reaches 74.4%
• Energy costs remain a concern in Europe

The German HRC market continues to show resilience where prices showed inclination by 0.4% as domestic mills maintain strong order positions through the first quarter. Mills are offering limited spot volumes, focusing instead on securing long-term contracts. The European HRC landscape is particularly influenced by buyers' preference for domestic material, driven by concerns over potential import duties and extended delivery times for foreign material.

The US HRC market demonstrates notable strength with prices increased by 1.2%, supported by improved mill activity and increasing demand from the energy tubular goods sector. According to the American Iron and Steel Institute (AISI), raw steel production reached 1,656,000 short tons in the week ending February 1, marking the second-highest production level of the year. This robust production level has provided stability to the HRC market while supporting price movements.

The HRC sector in USA is experiencing divergent trends between flat and coated products, with flat products showing stronger performance. Higher scrap prices and expectations of further increases have bolstered market optimism, particularly in the HRC segment. However, coated products face challenges from late imports and high interest rates affecting construction sector demand.

Import competition remains limited in both regions, though for different reasons. European HRC buyers are cautious about imports due to potential duty changes and longer lead times, while US buyers benefit from strong domestic mill performance. The European Commission's ongoing investigation into imports and potential trade actions continue to influence market participants' decisions.

Both markets show interesting contrasts in supply-demand dynamics. While HRC mills report healthy order books, there are underlying concerns about overall demand sustainability, particularly in Europe where the automotive sector faces challenges. The US market benefits from stronger energy sector demand, though construction-related consumption remains subdued.

As per ChemAnalyst, the HRC market outlook remains cautiously optimistic through early 2025, with prices expected to maintain their upward trajectory in both regions. The US market is likely to benefit from continued strong mill utilization rates and energy sector demand, while European prices will remain sensitive to automotive sector performance and energy cost developments. A full market recovery will require sustained end-user demand, stable raw material costs, and clarity on trade policies.