EU HRC Futures Surge on Expected Steel Safeguard Tightening

HRC 

European hot-rolled coil (HRC) futures and equities experienced a significant rally amid expectations of stricter steel import safeguards by the European Commission. The market anticipates a substantial reduction in import quotas following the commission’s upcoming announcement to the World Trade Organization (WTO).

Rising Futures and Mill Pricing Strategies

Steel producers are responding to the anticipated safeguard adjustments by raising their prices. A leading mill has informed buyers that it plans to set prices at €680/t in the coming days, with a potential increase to €700/t shortly thereafter. Several mills have already withdrawn offers, expecting stronger pricing momentum.

On the CME Group’s north EU HRC contract, increased buying activity has been observed. Two March-April spreads traded at -€10/t, with outright prices ranging from €625-635/t. A 5,000t April contract closed at €643/t, reflecting an €8/t increase from the previous settlement. May futures also climbed, reaching €648/t in subsequent trades.

Equity markets responded favorably, with ThyssenKrupp shares rising over 3% and Salzgitter gaining nearly 4.5% during morning trading.

Market Dynamics and Physical Price Surge

Despite initial concerns over new U.S. import tariffs, EU HRC futures have rebounded strongly, with trading volumes surpassing 19,000t by midday—marking the highest daily turnover since December 4. Market sources indicate that traders are hedging physical inventories, prompting increased sales activity. Service centers report a higher number of domestic offers from traders who secured material at lower prices during the weak fourth-quarter market.

Physical HRC prices have surged over the past five weeks, primarily due to reduced import volumes rather than an increase in end-user demand. According to Argus data, the north EU HRC index has risen by €52.50/t, from €558.25/t on January 6 to €610.75/t on February 19. Similarly, the Italian HRC index climbed by €40.50/t over the same period.

Increasing Margins for EU Producers

The narrowing import window has significantly improved profit margins for northern European HRC producers. Margins have expanded by €49.44/t, reaching their highest level since September 2024. If safeguard measures tighten further, domestic mills could continue to benefit from favorable market conditions.