European Hot Rolled Coil Prices Settle on a Bullish Note for Q1 2023

Germany: Hot Rolled Coil prices fell during the mid-fourth quarter of 2022 owing to increased product availability in the regional market and a limited downstream demand outlook. However, European Hot-Rolled Coil manufacturers continue to book December tonnages at lower prices. Despite progress in long-term contract negotiations, Hot Rolled Coil manufacturers have yet to offer discounts for the first quarter of 2023. Transactions for December volumes were heard at USD 632-642/MT EXW in Germany and the Benelux region. However, several mill sources claim that the current minimum price for January delivery is closer to USD 675/MT EXW. Manufacturers claim that if prices remain below USD 675/MT EXW, they will be forced to reduce capacity.

According to our sources, only December Hot Rolled Coil delivery tonnages were available at discounted prices. Producers anticipate that downstream demand from the automotive sector will begin to recover next year. Of course, it will not be booming, but Hot Rolled Coil mills anticipate a recovery from the low levels seen in 2022. According to several sources, long-term agreements with the automotive industry end consumers have been reached at higher prices than initially targeted. In October, buyers expected the long-term Hot Rolled Coil price to be no higher than USD 724/MT EXW. However, the agreements are now set at USD 824-880/MT EXW. This is lower than expected for 2022, but it is a positive sign for the market. Hot Rolled Coil prices are expected to rise in the first quarter of 2023 as a result of production cuts, according to market participants.

For the time being, Hot Rolled Coil buyers will be skeptical of such a significant price increase. However, some traders believe that steel service centers and distributors will need to place orders for February delivery to ensure Hot Rolled Coil availability, which could help mills achieve a price increase. According to reports, overseas suppliers are also aiming for higher prices. As a result, ChemAnalyst anticipates that Hot Rolled Coil prices will rise in tandem with the gliding downstream automotive industry.