Northwest European hot rolled coil prices are seen rising further after bottoming last month, but sluggish demand is likely to limit increases, say regional market participants.

The expectations of market players are divergent. Buyers have long expressed understanding for the necessity of higher mill prices because of rising iron ore and other costs, but point to the lack of end-use demand.

So far, most observers agree the trough has been left behind, but also that overall demand has been too sluggish to expect big surges. Some, however, see new prospects. One experienced Dutch manager observes that “…in the northern part of the EU demand has improved considerably.”

If this is the case, domestic suppliers can be grateful that pressure from cheap imports on the European steel market has decreased significantly. “We even received reports that two larger German producers that supply hot rolled coil have left the market in the third quarter as if they were fully booked up to September,” the manager notes. This is confirmed by two buyers at German fabricator companies. All these sources concur that increases of €30/tonne ($34) should be obtainable by domestic mills.

The Dutch manager tells Kallanish: “Several mills have opted for a base price of between €430 ($492) and €450 for hot rolled coil in the contract negotiations for delivery in the second half of 2020.” He also notes “…it is very difficult to negotiate.”

ArcelorMittal announced at the end of June its intention to go to a base price of €440/t for HRC. Similarly, Tata Steel recently sent a letter to UK buyers announcing an increase in the base price of £50 ($69).

So far, however, prices have inched up only gently, and in most cases will be above €400/t ex-works, but the clear step forward remains to be seen.