German Hot Dip Galvanized (HDG) Prices Slip 0.5% on Weak Demand

Key Takeaways:

The markets for HDG in Germany followed the wider Northern Europe trend of weaker prices, with the 0.5% decline reflecting the struggles in regional steel market pricing. Whereas Southern European steel markets, such as Italy, saw modest price increases from selective deal activity, Northern European markets including Germany, experienced increased demand-side pressures, which limited the potential for effective price support for HDG.

The regional divergence apparent within European steel markets is clear, as Italian heavy plate markets showed small increases, while Northern Europe was weak. The HDG markets displayed more homogeneous weakness across regions, attributable to heavy dependence on automotive and construction application sectors, both of which have faced serious headwinds during the reporting period.

Asian suppliers kept supply imported galvanized products to European markets, accepting potential additional carbon border adjustment mechanism costs in their prices. Nonetheless, European market participants interest in HDG imports remained low as buyers awaited more clarity on the implementation of a carbon border adjustment mechanism. The relatively small price gap between domestic HDG and imports minimized any immediate pressure to import while the competitive overhang remained.

Import penetration at 25% market share levels remained a challenge to domestic HDG producers, though this was an improvement from 27% in 2024. The ongoing elevated level of imports hindered the ability of German producers to implement material HDG price increases, which added the weekly decline despite decreased import activity.

Steel-consuming industries continued to follow their pattern of contraction as Q1 2025 output contracted by 3.2%, which has a direct effect on HDG consumption. The automotive industry, which is a vital end-market for HDG applications in body panels, and structural components, is facing a particularly sharp contraction, with a projected 4.2% decrease in 2025 output. The automotive weakness is weighing heavily on HDG demand fundamentals and exerting a downward impact on HDG pricing.

Construction sector activity was slightly stabilizing with anticipated growth of 0.4%; however, this slight improvement was not enough to counter the general weakness in the wider industry impacting HDG consumption. The slump in the automotive sector combined with limited growth in construction created poor demand conditions for German HDG markets.

Ongoing unresolved EU-US trade disputes, continued to create uncertainty for HDG markets. European steel producers were operating under 50% tariff barriers than eliminated significant export opportunities.   This trade policy burden, along with the continued presence of low-cost imports, placed additional pressure on domestic HDG pricing and further limited export relief opportunities.

EUROFER's alerts about possible plant closures and irreversible capacity loss illustrated structural issues that German HDG producers are experiencing from prolonged trade tensions and a global overcapacity environment affecting steel industry.

According to ChemAnalyst, prices for German HDG are expected to remain under pressure across much of 2025, with significant recovery unlikely until 2026 conditional on an improved outlook for the automotive sector and resolution of trade policy uncertainties. The weakness in the steel-consuming sector, coupled with import competition and trade difficulties, is expected to limit HDG price directionality even though the introduction of any new EU trade defence measures may offer some support, along with the gradual stabilisation of the automotive sector, for domestic galvanized steel producers over the medium term.