Northwest European hot-rolled coil (HRC) prices are expected to settle at €750-800/t base ex-works in the fourth quarter, a survey recently conducted by Argus shows.
By the end of the year, 44pc of respondents saw prices at €750-800/t, with 32pc at €700-750/t and 15pc at €800/t and above following the webinar survey on 8 September. The rest of respondents said they expect prices to fall below €700/t ex-works.
Earlier in the year, many market participants said they expect prices to surpass €800/t ex-works, given import supply constraints.
But demand has not picked up so far in September and stock overhang from previous purchases has reshaped expectations. Buyers continue to report relatively high inventories and an inability to pass increases downstream due to poor purchasing activity.
The combination of the carbon border adjustment mechanism and new import quota measures has led to price growth, but this has been more contained than what was previously envisaged. Since the announcement of the new safeguard measures on 30 June, Argus' ex-works northwest EU HRC index has risen by €71.75/t to €736/t today.
Blast furnace capacity utilisation in Europe only rose by just over one percentage point to 68.58pc over June 27-August 22, according to data from Navigate Commodities. Ramping up production has not been easy for mills, which have struggled with production issues.
A large portion of surveyed market participants — 48pc — said they also do not expect a review of the current quotas over the next six months. The European Commission is currently in the process of assessing whether the product scope of the steel measure needs to be amended, with the consultation for that running out at the end of September.
