European Hot Rolled Coil Prices Likely to Increase in Upcoming Months Amid Hike in Electricity Cost
- 24-Aug-2023 4:33 PM
- Journalist: Emilia Jackson
In the week ending August 24, the price of Hot Rolled Coil in the European market showed a rising tendency as the electricity and energy costs rose across Europe. The offer is anticipated to rise as most mills have been offline in the ongoing season. The market players across the domestic European market have been in a wait-and-watch situation as they anticipate a boost in Hot Rolled Coil demand after the summer break. The European mills are trying to push the prices positively despite weak demand from local buyers.
The Hot Rolled Coil buyers in the domestic market were earlier affected by the lowering of demand from the end user's side. The only choice left for the producers to increase their prices was slowing down their output, hoping to balance the market shift toward a stable trend. The mills were panicking, offering Hot Rolled Coil at much lower prices and discounts. The summer break in the European market hampered the consumption of Hot Rolled Coil from the downstream construction and automotive sectors.
After the summer holidays' closure, Hot Rolled Coil prices are expected to rise in the European market. The demand for Hot Rolled Coil from the end-user industries, such as Czech automotive, the largest automotive producer in Central and Eastern Europe, has shown an increase in output and sales of passenger vehicles since the start of the second half of 2023. Furthermore, Poland's downstream construction sector shows a bullish trend as it rose by 1.1% in the third quarter. The infrastructural projects backed by the European Union's financial support have been a major growth-driven trend in Poland.
The local mills have decided to decline their production rate for Hot Rolled Coil amid most steel mills withdrawing their offers from August 22 till mid-September. This will create a lack of supply in the local warehouses and help boost prices. Additionally, the Salzgitter steel plant has announced that it will undergo a relining process to repair its blast furnaces. This would take time for 100 days or more, which means it will restart its production activity in late November or December. This will create a lack of Hot Rolled Coil supply in the local warehouses and will help to boost its prices.
Additionally, to tackle the increasing electricity cost, the German government is now proposing a new economic idea for "Bridge Electricity Prices," in which the steel companies who have already decided to support green energy and reduce their carbon percentage will be provided electricity at a cheaper rate of 6 cents per kilowatt hour for their first 80% of electricity consumption. The European Union is trying hard to convert its energy dependency towards green and renewable energy sources. This policy will help in easy access to green energy at a cheaper price and boost the Hot Rolled Coil market across Eurozone nations.
According to ChemAnalyst, the price of Hot Rolled Coil will show a rising trend in the European spot market as the demand from the downstream automotive industry is expected to uplift after the summer holiday closure. The mills are going for production curtailment, which would create a lack of supply and prompt them to increase their prices. The market player across the European region strongly anticipates that the new deals from the government and local mills will mount the price of Hot Rolled Coil to a higher level.