Steel prices in the European Union have experienced a significant increase, particularly for hot rolled coil products, as workers return from summer holidays. This trend is raising concerns about the implications for the steel industry. Current market conditions indicate that inventories for flat rolled products are low, leading to increased offers from mills.
Prices for hot rolled coil are currently being quoted between €590-600 (approximately $690-700) per metric tonne for production and delivery in autumn. This marks a rise from the €540-550 (around $630-640) range sought in late August. Sources within the industry suggest that steelmakers are unlikely to negotiate significantly on these prices, especially after a summer characterized by lower price levels. “Mills will likely get closer to the price that they are seeking,” one source stated.
Cost Pressures and Regulatory Uncertainty
In addition to low inventories, rising input costs are exerting further upward pressure on steel prices. Data from Trading Economics indicates that the price of benchmark 62% Fe iron ore reached $104.93 per metric tonne CFR Tianjin, which is an increase of over 12% from its low of $93.41 on July 1. The anticipated enactment of the Carbon Border Adjustment Mechanism (CBAM) on January 1, 2026, coupled with concerns over potential retroactive tariffs due to unclear regulations, has led to hesitance in engaging in import transactions. This uncertainty has further contributed to price increases in the domestic market.
In mid-August, Indonesian mills offered steel at less than €500 (approximately $585) per metric tonne CFR European ports. However, the projected delivery timeline extending beyond 2026 limited interest from European buyers. According to sources, the European Commission is expected to release guidelines for the CBAM in the fourth quarter of 2023.
Ongoing Consultations and Industry Impact
In late August, the European Commission initiated another consultation on the methodology rules for calculating carbon emissions embedded in goods related to the CBAM. This initiative aims to simplify the CBAM Regulation and enhance its cost-efficiency. The Commission’s statement, released on August 28, highlighted its goal of providing clarity and legal certainty for businesses while supporting Member States in their implementation efforts.
“This initiative is in line with the Commission’s efforts to simplify the CBAM Regulation and make it more cost-efficient,” the European Commission stated.
The consultation targets businesses within the EU and stakeholders from non-member countries that could be affected by the CBAM. Authorities from EU member states responsible for implementation and those from third countries that have adopted or are developing carbon pricing instruments are also invited to participate. This follows a previous consultation held in June, indicating that discussions around the CBAM are an ongoing process. “The plusses and minuses of the plan are a constant process,” a source remarked.
Introduced in 2023, the CBAM aims to address carbon leakage by ensuring that industries transferring production to countries with less stringent carbon constraints face similar costs to those under the EU’s Emissions Trading Scheme. The CBAM applies not only to iron and steel but also to aluminum, fertilizers, electricity, and hydrogen. As the situation evolves, stakeholders in the steel industry are closely monitoring these developments amid fluctuating prices and regulatory changes.
