HRC steel futures at $1,166/t on July 10, down 0.42% on the day, according to Trading Economics. The global benchmark is down 2.91% month-over-month but still up 34.6% year-over-year. The US market shows a divergence: futures point lower while physical prices hold at $890-950/short ton.
The story this week is the EU's new tariff-rate quota (TRQ) regime, which took effect July 1. The new system cuts tariff-free import volumes by half — from approximately 33 million tonnes to 18 million tonnes annually — and doubles the out-of-quota duty to 50%. The immediate impact: Northern Europe HRC at 691 EUR/t, up 9 EUR/t on the second trading day of the new regime. Southern Europe HRC is at 665 EUR/t, up 5 EUR/t.
The US market is in a different phase. Nucor lowered its Consumer Spot Price (CSP) for HRC to $890/ton, down $5, while Cleveland-Cliffs opened its July order book at $950/ton — up $40 from June. The $60 spread between the two largest producers is unusual and suggests market uncertainty about the true price floor. Physical spot trades are reported at $850-860/ton in the US South.
Section 232 tariffs continue to reshape trade flows. President Trump's February 2025 proclamation extended and increased steel tariffs to 50% on certain derivative articles, and the full-value 25% duty now applies to steel-based manufactured goods. US mill utilization is holding just below a four-year high at 80.3%, and imports have fallen sharply as the tariff wall makes foreign steel uncompetitive.
Global steel demand is a mixed picture. China's property sector remains weak, but infrastructure spending (including the Belt and Road) provides a floor. India's steel demand is growing at 8-10% annually and will soon surpass Japan as the world's second-largest steel consumer. Europe is in a mild industrial recession, but the TRQ changes are creating localized price support for European mills.
The raw material side is neutral. Iron ore at $98.57/t, down 0.29% on the day and relatively stable month-over-month. Met coal prices are steady but supported by Indian demand. US scrap steel is tight on export demand from Turkey and Mexico.
Bull case: EU TRQ restrictions tighten European supply further, US infrastructure spending boosts demand, and global protectionism keeps trade flows constrained. HRC tests $1,300/t.
Bear case: Chinese steel exports surge as domestic demand weakens, US auto production slows, and the EU recession deepens. HRC falls to $950/t.
Base case: HRC holds $1,100-1,250 globally through Q3, with US and EU premiums persisting on tariff/quota protection.
The global steel market is being reshaped by tariffs and quotas, creating regional divergence. US buyers face higher domestic prices ($850-950/st) but secure supply. European buyers face tightening import quotas that will push prices higher for in-quota material. Asian buyers face the most competitive market with Chinese export pressure. The procurement strategy depends on region: US buyers should lock in domestic mill contracts at current $850-890 levels — further downside is limited by tariff protection. European buyers should accelerate Q3 coverage before the TRQ impact fully prices in. Asian buyers should monitor Chinese export policy — if Beijing restricts steel exports to keep domestic prices stable, Asian HRC could spike 10-15%. Regardless of region, maintain at least 60 days of safety stock given the policy uncertainty.