The European steel market is currently going through a difficult period. High inventories, limited demand and possible new trade restrictions are weighing on prices and overall market dynamics. Nevertheless, in January 2025, hot rolled coil (HRC) prices in Northwest Europe rose to €580/t and are expected to rise further to €640/t in the second quarter.

These are the forecasts provided by World Steel Dynamics (WSD) in its EU Steel Dynamics Reports and Analytics Service February 2024 report.

The lack of sustainable demand for steel was reflected in the stagnation of consumption in the construction sector (-2% in January) and the automotive industry (-1%). At the same time, producers are trying to compensate for the fall in domestic demand by increasing exports, although oversupply on the global market makes this a difficult task.

According to WSD’s forecasts, prices for basic steel products may stabilize at the following levels by the end of the first quarter of 2025:

• HRC, NW Europe: €640/t;
• CRC, NW Europe: €720/t;
• HDGC, NW Europe: €750/t;
• Plate, NW Europe: €770/t.

In February, HRC prices are expected to reach €600-610/t, with further growth possible in April-May due to import restrictions. However, high inventories in the first quarter may keep prices from rising further.

Price growth will be driven by higher raw material and energy costs. For example, the price of electricity, which stood at €107/MWh in December, may fluctuate between €95 and €117/MWh in the second quarter of 2025, which will affect producers’ costs.

Possible risks for the market:

1. Trade restrictions. The proposed new 25% duty on European steel in the US could significantly reduce exports and lead to oversupply in the EU domestic market.
2. Declining demand. Despite a projected recovery in the second half of 2025, the risk of further downturns in industrial sectors could halt price growth.
3. The Chinese factor. Sentiment on the Chinese market after the holidays looks negative due to a drop in the steel PMI. This could put pressure on iron ore prices, which could fall to $95/t, helping European producers to expand margins but restraining steel price growth.
4. Overproduction. If capacity utilization remains low, margin growth above €140-150/t may trigger an increase in local production, which will further restrain price growth.

Thus, despite the expected recovery in prices in the first half of 2025, the market outlook remains uncertain. The main factors that will determine price movements will be trade policy, the economic situation in key sectors, and energy costs. Starting from the second half of 2025, WSD forecasts that prices will decline.