[SMM Global HRC Weekly Review] EU Import Premium Erodes as Quotas Exhaust; Weak Southeast Asia Contrasts Europe Support

Global hot-rolled coil (HRC) import and export quotes diverged further during the week of October 9 to October 16. According to SMM research, European markets entered a "customs queueing" phase following quota exhaustion; Northern Europe landed quotes for Indian HRC dropped 10 USD/tonne WoW as previous quota premiums began to erode. Conversely, tight local supply in Italy pushed CIF import quotes up by another 5 USD/tonne. Asian markets were under pressure overall: Indonesian FOB quotes fell 10 USD/tonne WoW, dragging Vietnamese import prices down with them, while elevated post-holiday inventories and lower raw material costs in China led to a slight pullback in Chinese FOB quotes. Indian FOB prices ticked up against the trend on domestic mill maintenance and cost support, diverging from its European CFR trajectory. Black Sea export quotes slipped 5 USD/tonne WoW as escalating shipping risks further discounted deliverability.

Export Market Review: Asia Softens; India Gains Counter-Trend

China (High Inventories Weigh; Quotes Edge Lower): HRC FOB quotes at Tianjin Port fell 1 USD/tonne WoW to 494 USD/tonne FOB, oscillating within a tight range of 493–496 USD/tonne FOB throughout the week. On Friday, quotes stood at 492 USD/tonne FOB at Jingtang Port, 490 USD/tonne FOB at Caofeidian, and 494 USD/tonne FOB at Bayuquan. According to SMM research, export transactions settled mainly between 489 and 495 USD/tonne FOB. Small mills quoted Q235 at 486–493 USD/tonne FOB, while major mills held SS400 quotes at 500–505 USD/tonne FOB. Overseas buyers pressed target bids down to 480–485 USD/tonne FOB, with some traders short-selling as low as 475–485 USD/tonne FOB. Three primary factors dragged quotes lower:

Elevated Inventories: SMM data showed HRC social inventories across 86 surveyed warehouses at 5.0271 million tonnes. Although inventories posted their first post-holiday draw (down 38,400 tonnes WoW) and apparent demand surged by 356,300 tonnes WoW, stock levels remained 17.25% higher YoY.
Eroding Cost Support: A second round of coke price cuts landed and iron ore hovered at low levels. SMM estimates show HRC mill margins returned above breakeven, giving producers room to grant price concessions.
Widening Price Advantage: Chinese HRC FOB quotes remained ~181 USD/tonne lower than Indian quotes and ~116 USD/tonne below Turkish quotes. SMM data showed September export orders reached 3.2565 million tonnes (up 6.60% MoM), marking a third consecutive month of growth as mills prioritized volume over price.

India (Maintenance Support Floors Home Market; FOB Quotes Tick Up): Indian export quotes rose 5 USD/tonne WoW to 675 USD/tonne FOB. According to SMM research, this uptick was propelled by domestic rather than export demand. A ~3-week maintenance shutdown at Tata Steel's Meramandali plant continued alongside concurrent maintenance at JSW, tightening local spot availability. Meanwhile, quarterly coking coal contract adjustments reflected earlier price gains, transmitting cost pressures into October–November steelmaking costs. Strong automotive demand kept domestic prices firm, leading mills to prioritize domestic sales over exports. New offers to Vietnam and the Middle East remained scarce, with indicative European target prices at ~670 USD/tonne FOB. However, with India's Q4 EU quota fully exhausted on October 8, new European orders can only clear in January 2027 or Q1 2027. Consequently, export transactions were thin, and holiday-season quietness left higher FOB quotes lacking transaction confirmation.
Türkiye (High Offers, Low Executions; Quotes Hold Flat): Turkish export quotes held flat at 610 USD/tonne FOB. According to SMM research, mills attempted to raise prices, with initial export offers hanging at 620–650 USD/tonne FOB and climbing to 630–645 USD/tonne FOB later in the week. However, European buyers insisted on delaying shipments until after the January 1 quota reset, rendering high quotes unexecutable. Domestic HRC prices rose 5 USD/tonne to 625 USD/tonne EXW as mills booked output into January, while import quotes held at 555 USD/tonne CFR. To sidestep anti-dumping duties on HRC imports, some rerollers shifted to purchasing full hard coil as an alternative substrate. Softening scrap prices further deprived mills of cost justification for higher export quotes.
Black Sea (Logistics Discount Widens; Quotes Cut): Black Sea export quotes fell 5 USD/tonne WoW to 515 USD/tonne FOB. According to SMM research, seaborne logistics in the Black Sea ground to a near-total halt as shipowners avoided Romanian and Bulgarian ports. Russian cargoes redirected to Baltic and northern ports faced severe congestion due to grain transport prioritization, prompting major Russian suppliers to defer billet shipments into January. Despite a "ceasefire on energy infrastructure" announced by the US on October 11, attacks continued and maritime risks showed no sign of easing. The price drop reflects an expanding deliverability discount rather than increased supply.
Indonesia (Heightened Vietnamese Competition; Deepest Weekly Decline): Indonesian export quotes dropped 10 USD/tonne WoW to 515 USD/tonne FOB, recording the largest drop among key benchmarks. According to SMM research, a major mill issued a 10 USD/tonne price cut on October 12 amid large-volume offers surfacing in Vietnam. As domestic allocations at major Vietnamese mills sold out and local buyers finished restocking, import demand softened, leaving Indonesian mills with weak bargaining power. On raw materials, Indonesian slab prices fell 10 USD/tonne over two days to 480 USD/tonne FOB, easing cost support. However, further downside was capped by an unscheduled maintenance stoppage at an Indonesian HRC line, which delayed export deliveries. Ongoing industrial water supply issues also made mills reluctant to lower prices further, holding executable quotes for Jan–Feb shipments to Vietnam steady at 532–534 USD/tonne CFR.

Import Market Review: European Quotas Enter Clearance Queue; Southeast Asian Buyers Shift to Domestic Material

Europe (Quota Premiums Eroding; Local Tightness Floors Prices): Northern Europe landed quotes for Indian HRC dropped 10 USD/tonne WoW to 750 USD/tonne CFR, whereas Italian CIF import quotes rose 5 USD/tonne WoW to 715 USD/tonne CIF. According to SMM research, these opposite movements were driven by distinct catalysts:
- Indian Cargoes: Following Q4 quota exhaustion on October 8, delayed shipments applied for clearance en masse, putting arrived cargoes at risk of a 50% out-of-quota tariff. Some buyers withdrew clearance applications to wait for the January 1 reset and began calculating new order costs for the April quota window, pulling Indian target offers down toward ~750 USD/tonne CFR.
- Italian Market: Local supply remained exceptionally tight. As ADI Taranto's hot-end shutdown deadline neared (with a Supreme Court hearing set for October 20), Northern European mills largely sold out Q4 allocations, and low-priced buyer inventories were depleted. Domestic EXW prices hovered around 831–833 EUR/tonne EXW (~852–854 USD/tonne EXW). Italian imported material was quoted at 760 EUR/tonne DDP (~852 USD/tonne DDP), with Q1 and Q2 arrival cargoes expected to rise to 780 EUR/tonne DDP (~874 USD/tonne DDP). Quota consumption accelerated sharply: as of October 15, the total Q4 quota utilization rate reached 47.6%. The FTA HRC quota (09.9500) was fully exhausted after absorbing 121,000 tonnes in a single day, Vietnamese quotas dropped from ~48,000 tonnes to ~14,000 tonnes in one week, and South Korea and Egypt used ~32,000 tonnes and ~20,000 tonnes, respectively (Japanese HRC quotas remained unused). Offers for Asian origins in Antwerp stood at ~874–896 USD/tonne DDP, exceeding local delivered prices and facing buyer rejection. A ~1.7% depreciation of the Euro against the USD since late September further inflated import costs.
Southeast Asia (Buyers Pivot to Local Mills; Import Quotes Soften): Indian HRC CFR quotes to Vietnam fell 5 USD/tonne WoW to 570 USD/tonne CFR. According to SMM research, the broader Vietnamese import market softened: after Vietnam's two major domestic steelmakers sold out their combined domestic allocations of ~800,000–900,000 tonnes, buyers completed advance restocking and recorded zero new import deals for the week. Mainstream ASEAN prices dropped from 541 to 535 USD/tonne CFR, with buyer target bids squeezed to 530–533 USD/tonne CFR (Indonesian Jan–Feb shipment cargoes traded at 532–534 USD/tonne CFR). Indian mills prioritized domestic sales and refrained from issuing firm offers to Vietnam; the ~35 USD/tonne price gap between Indian and mainstream ASEAN material resulted in virtually zero liquidity. Chinese Q195 HRC was quoted at 500 USD/tonne CFR (down 2 USD WoW) and Q235 at 510 USD/tonne CFR—25 to 35 USD/tonne below ASEAN material—setting the lower floor for regional pricing. Taiwanese SAE1006 offers at 530–540 USD/tonne FOB (~560–570 USD/tonne CFR Vietnam) remained uncompetitive against Indonesian material.

Market Outlook

Q1 Pricing Window in Europe: European mills have yet to release Q1 2027 opening quotes but are expected to announce prices following upcoming industry conferences. With Q4 quotas draining rapidly (FTA quotas exhausted and Vietnamese allocations near zero), import focus is shifting to January and April clearance windows. A rush of customs clearances is expected on the January 1 reset date. If ADI Taranto's hot end halts production in late October, Italian import demand will rise further, supporting landed quotes. Conversely, Indian offers to Europe will lack transaction support until quotas reset.
Spread Between Southeast Asia and China: Chinese HRC offers to Vietnam remain 25–35 USD/tonne lower than mainstream ASEAN material. Coupled with declining Indonesian slab prices, ASEAN quotes face pressure to drift down toward 530 USD/tonne CFR if Vietnamese buyers refrain from active restocking. In China, domestic inventories remain 17% higher YoY and a third round of coke price cuts is brewing; lower raw material costs provide mills additional room for export concessions, keeping the 490 USD/tonne FOB mark as a key downside level to watch at Tianjin Port.
Indian Maintenance and Maritime Logistics: Maintenance at Tata Steel is expected to wrap up around late October. If domestic prices soften post-resumption, Indian export interest may revive, bringing offers back to Vietnam and the Middle East. Meanwhile, increasing vessel attacks in the Strait of Hormuz and ongoing Black Sea disruptions will keep freight rates and war risk insurance premiums elevated across affected shipping routes.