Dark Clouds May Shroud the European Hot Rolled Coil Market After a Bullish Start in Q1 2023
Dark Clouds May Shroud the European Hot Rolled Coil Market After a Bullish Start in Q1 2023

Dark Clouds May Shroud the European Hot Rolled Coil Market After a Bullish Start in Q1 2023

  • 04-Jan-2023 6:01 PM
  • Journalist: Li Hua

Hamburg (Germany): During the first week of the year, the Hot Rolled Coil (HRC) market in Europe showed bullish sentiment due to an increase in demand. However, market participants are unsure if this trend will continue throughout the first quarter of 2023 due to falling end-user demand and economic and geopolitical uncertainty. Furthermore, following the volatile environment in 2022 as a result of the global geopolitical situation, market participants have been hesitant to make forecasts for the upcoming second half of 2023. The traditional yearly market cycles have shifted in recent years, making it challenging for manufacturers to forecast the HRC market trend over the year.

According to our sources, the HRC outlook has been optimistic since the beginning of 2023, with lower domestic availability, reduced competition from imports, and a revival in demand. However, market participants are still sceptical that the uptrend that began in December will be prolonged throughout the first quarter of 2023 as end-user demand falls and the economic and geopolitical situation remains uncertain.

In 2022, European manufacturers of HRC faced rising energy costs and higher production costs amid low demand. To support coil prices, producers reduced production in the final quarter of 2022, but the effects were not apparent until the end of the year. As a result, this has been a price-supporting factor for HRC in the first half of 2023. This year, mills have delayed curtailments due to concerns about a potential increase in supply after lockdowns end. With the oversupply ending and import prices not being competitive enough, European traders believe that European mills have more leverage in the first quarter due to low inventories.

The growing speculations around new antidumping cases, as well as the approaching implementation of the Carbon Border Adjustment Mechanism, have prompted buyers to be cautious when booking non-EU material. Thus, HRC buyers will need to strengthen their relationships with European factories to secure adequate volumes. Furthermore, the Central European Service Center predicts a 30% drop in steel demand from the automotive sector in the first quarter.

As a result of lower inventories of HRC, decreased competitive import offers, and steady demand from end consumers, ChemAnalyst anticipates that HRC prices will remain high in the coming weeks. Although manufacturers' sentiment is positive for the week ending January 6. Still, there are still concerns that the price recovery will end once buyers restock their required volumes by mid-January.

Related News

Malaysian and US HRC Prices Reflect Industry Challenges and Government Initiatives
  • 17-Apr-2024 5:42 PM
  • Journalist: Xiang Hong
Shyam Metalics and Energy Ltd Unveils Plans for Stainless Steel Flat Products Expansion
  • 10-Apr-2024 4:36 PM
  • Journalist: Motoki Sasaki
European Hot Rolled Coil Price Faces Challenges as The Demand Lowers Amidst Market Uncertainties
  • 28-Feb-2024 12:20 PM
  • Journalist: Li Hua
Italian Hot Rolled Coil Price Observed Rising Trend Amidst Strong Demand from Construction Industries
  • 12-Jan-2024 2:17 PM
  • Journalist: Li Hua