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European Hot Rolled Coil Market Maintains Lower Profit Margin in Mid-July of 2023
European Hot Rolled Coil Market Maintains Lower Profit Margin in Mid-July of 2023

European Hot Rolled Coil Market Maintains Lower Profit Margin in Mid-July of 2023

  • 24-Jul-2023 12:26 PM
  • Journalist: Timothy Greene

The price of Hot Rolled Coil is maintained on a lower edge in the European steel market as the consumption rate decreases from the downstream construction sector. The inventory level for the Hot Rolled Coil was on a higher edge as the trade conditions plunged in the European market. Additionally, feedstock such as Iron ore retained a  hike in local inventory levels amid China's stimulus bets. The declining energy and production costs decreased the offer price for Hot Rolled Coil via local mills. The buyer's sentiment remained uncertain amid the weak market situation.

The supply of feedstock of Hot Rolled Coil, such as iron ore, inched up in the European market amid supply from the overseas Rio Tinto mine in Australia rises as the consumption rate plummets in the European and foreign Chinese steel mills. As per market players, most Hot Rolled Coil manufacturing plants went into the shutdown phase as the demand from the buyers' side was deteriorating. The capacity of the Gudai-Darri mine was increased, which stemmed from enlarged extraction rates. The lower steel manufacture resulted in the accumulation of feedstock inventories level and caused a decline of 4% in export from the Rio Tinto mines. The macroeconomic factors regarding the implementation of the Chinese stimulus bet led to the decline of feedstock Iron ore price and consumption rate. Furthermore, the production cost was shrinking at a rapid rate as the energy cost was subsidized by the European government, which led to a decline in the price of Hot Rolled Coil.

The downstream construction sector showed a bearish market sentiment as the uncertain economic condition and increased other feedstock prices such as Concrete and cement put downward pressure on the Construction activity. The declining housing sector is expected to shift further as the reduction in building permits intensifies, resulting in a lower consumption rate of Hot Rolled Coil in Europe. The US government has planned to ease visa rules for joining foreign building workers. The cost hike, increasing interest rate, and uncertainty in the real estate sector from manufacturers' and buyers' sides caused a pessimistic trend for infrastructural development activities. The buyer's side remained in a wait-and-watch situation as the uncertain economic condition hampers the buying ability of customers for Hot Rolled Coil in the European spot market. The customers denied orders as they were expecting a further decline in the price of Hot Rolled Coil.

According to ChemAnalyst, the price of Hot Rolled Coil is expected to decline further in the upcoming months as the energy cost is expected to reach zero as the electricity contribution from the solar and wind plants has surpassed thermal power generation. This would ultimately decrease the production cost for Hot Rolled Coil. The uncertain economic and market sentiments will keep buyers from placing large orders.

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