European HRC Steel Market Sees November Rebound Amidst Challenges

European HRC Steel Market: November Recovery

---

In November, the European hot-rolled coil (HRC) steel market experienced a notable rebound. This recovery was primarily due to a rise in spot steel prices and a decrease in coking coal costs, which collectively helped to enhance the spread between HRC steel and raw material prices. The upward trend in HRC prices, moving away from a three-year low, also eased pressure on steel margins. This was further supported by the strengthening of the euro against the US dollar, which lowered the costs of dollar-denominated raw material imports.

S&P Global Commodity Insights reported that the Northwest Europe HRC steel-to-raw material spot spread widened to an average of around €306/mt in November, a notable increase from €261/mt in October. However, despite this improvement, the spread levels in 2023 remained narrower than the averages of €520/mt in 2022 and €636/mt in 2021, when steel pricing and spot demand were stronger.

The European Union's steel industry, according to World Steel Association data, faced challenges with a 10.5% year-on-year reduction in pig iron production in October. This decline was attributed to maintenance-related stoppages at blast furnaces and weaker demand. Additionally, S&P Global tracked major steel feedstock cost references, including a variety of iron ores consumed by regional blast furnaces in Germany, France, and other regional EU markets.

HRC prices in November were assessed by Platts at an average of €655.45/mt ex-works Ruhr, reflecting a 6.9% increase from October. Iron ore import prices in China, crucial for global contracts, also saw a rise in November to $130.46/dry mt CFR China for benchmark Platts IODEX 62% Fe fines. However, spot lump ore premiums in China decreased, and coking coal prices on a delivered net forward basis into Rotterdam also dropped by 9.7%.

The majority of Europe's HRC production comes from integrated mills using iron ore and blast furnace production. In contrast, electric arc furnaces (EAFs), which are typically less emissions-intensive, are used less frequently. Notable exceptions include Italy's Arvedi and ArcelorMittal's Sestao plant in Spain, which produce flat steel via EAFs.

Overall, the European HRC market in November showed signs of resilience and recovery, although it continued to face challenges from various economic and industry-specific factors.

Source : Platts