European steelmakers are considering increasing prices for hot rolled coil (HRC) in response to recent trade measures introduced by the European Commission. The Commission has announced a 15% cap per origin over the "other country" tariff-rate quota (TRQ) for HRC, which is expected to discourage imports from third countries and drive buyers towards domestic material.

The HRC market in Europe has been stagnant, with weak consumption downstream. Before the Commission's announcement, EU steelmakers were anticipating a price decline of around €20/tonne ($21) for HRC in June. However, the latest EU move is likely to lead to a price rebound of up to €50/t, as stocks are particularly low.

Antonio Marcegaglia, chairman of Marcegaglia, believes that international coil prices may increase towards the end of the second quarter or the beginning of the third quarter. He notes that while final demand for coils at an international level is rather static, a technical restocking is expected due to improved confidence in relative price stability.

The Commission cites growing overcapacity in certain regions and a significant increase in Chinese exports to certain markets as the reasons behind the surge in imports from certain new origins. The TRQ amendment was made after the HRC other country quota was exhausted on the first day of the quarter for several consecutive quarters.

Current HRC prices are stable compared to the beginning of May, with limited trade and a lack of confidence on the side of buyers. Transactions range from €630-640/t base ex-works in Europe, or €650/t base delivered as quoted by a large producer. Price increase announcements are expected in the coming days, but the market remains fragile, and the hikes are expected to be moderate.