[SMM Steel] EU HRC Prices Hold Firm as Limited Spot Supply Supports Mill Offers

[India Domestic] Domestic steel market continued to strengthen, supported by higher raw material costs, particularly scrap and sponge iron. Mumbai Rebar up by 1.04USD/tonne (100INR/tonne) to 531.79USD/tonne (50,900INR/tonne) EXW Mumbai. Ingot up by 3.13USD/tonne (300INR/tonne) to 489.96USD/tonne (46,900INR/tonne) EXW Mandi. Raipur billet up by 5.22USD/tonne (500INR/tonne) to 454.44USD/tonne (43,500INR/tonne) EXW Raipur. PDRI sponge iron up by 1.04USD/tonne (100INR/tonne) to 308.22USD/tonne (29,500INR/tonne) EXW Raipur. Bellary PDRI sponge iron rose by 4.17USD/tonne (400INR/tonne) to 320.76USD/tonne (30,700INR/tonne) EXW Bellary. In the Bellary, PDRI quotes are currently placed at 323.87USD/tonne (31,000INR/tonne). However, actual deals today are expected to be concluded slightly lower, in the range 320.74-321.78USD/tonne (30,700–30,800INR/tonne), participants noted. Mandi HMS 1&2 (80:20) up by 3.13USD/tonne (300INR/tonne) to 400.17USD/tonne (38,300INR/tonne) delivered Mandi.

This week, HRC prices weakened compared to the previous week, with overall trading sentiment deteriorating. In terms of supply, the impact from rolling line maintenance decreased WoW, and overall HRC production rebounded. On the demand side, apparent demand rose WoW, but the September-October peak season demand has yet to fully materialize. In terms of inventory, SMM data showed HRC social inventory across 86 warehouses nationwide (large sample) at 4.6625 million mt, up 21,100 mt WoW, or +0.45% WoW, and +28.06% YoY. By region, all regions saw inventory buildup except North China, which posted a slight destocking. On the cost side, the fifth round of coke price increases was implemented this week. Looking ahead, the sixth round of coke price increase negotiations has begun, and cost support for HRC remains intact. Combined with steel mills currently operating at a loss, mills are maintaining a relatively firm stance on prices, providing strong downside support. Although restocking demand is expected ahead of the Mid-Autumn Festival and National Day holidays, peak-season demand has not yet been confirmed. With demand pressure limiting significant upward movement, HRC prices are expected to consolidate at current levels next week, with the most-traded contract estimated to trade in the 3,280-3,390 range.

EU HRC prices climbed early this week before entering a consolidation phase. The Northwest European index rose to €744.50/tonne EXW (approximately $864/tonne EXW) on Monday before easing to €736/tonne EXW (approximately $854/tonne EXW) by Friday, remaining broadly stable on the week. The Italian index settled at €734.25/tonne EXW (approximately $852/tonne EXW) on Friday, up €2/tonne on the day but little changed week on week, while gaining approximately €15/tonne from August 25. Transaction levels varied considerably. A northern European mill reportedly sold around 10,000 tonnes at €740-750/tonne EXW (approximately $858-870/tonne EXW), while a 2,000-tonne November-delivery lot in northern Italy changed hands at €750/tonne EXW, with larger volumes negotiable at €735-740/tonne EXW. However, actual transactions among core Northwest European buyers remained lower at €715-720/tonne EXW (approximately $829-835/tonne EXW). Mills’ November offers of €750-770/tonne EXW and test offers at €790/tonne EXW attracted limited acceptance, while portside material was available at €730/tonne (approximately $847/tonne, loaded). Supply-side disruptions remained frequent. ADI Taranto faced critically low raw-material inventories, while Metinvest Valsider, with combined plate and HRC capacity of 800,000 tonnes/year, ended its force majeure and was expected to resume production over the weekend. Europe’s blast furnace operating rate stood at 68.58%, while TTF natural gas prices approached €80/MWh, the highest level since December 2022. Import activity also picked up. Italy’s import assessment rose by €5/tonne on the week to €580/tonne CIF (approximately $673/tonne CIF), with Indian offers at €615/tonne CIF (approximately $713/tonne CIF) and Turkish offers at around $600/tonne FOB. Nevertheless, the 50% tariff on out-of-quota volumes and CBAM requirements for product-level emissions data continued to discourage firm bookings. First-quarter delivery offers were already seen above €750/tonne DDP (approximately $870/tonne DDP). Long steel markets diverged: Germany’s monthly rebar assessment fell by €17.50/tonne to €665/tonne DEL (approximately $771/tonne DEL), while Italy’s weekly rebar assessment increased by €15/tonne to €705/tonne EXW (approximately $818/tonne EXW). An industry survey showed that 44% of respondents expect Northwest European HRC prices to range between €750 and €800/tonne EXW (approximately $870-928/tonne EXW) in Q4. Outlook: Looking ahead to next week, import booking activity may accelerate ahead of the opening of the new quarterly quota window on October 1. Domestic HRC indices are expected to consolidate within €730-745/tonne EXW, with the direction of fourth-quarter contract negotiations remaining the key market driver.