HRC Steel Prices Explained
HRC steel prices rebounded slightly after it suffered low output and little demand from the market. China’s ( the largest producer ) production sank by 15% as declining margins for steel producers mirrored the cooling need for this commodity.
As a result, stocks of hot coils in Chinese warehouses rose by 12%, presenting a grim market outlook for the commodity.
Why are HRC steel prices fluctuating?
Generally, HRC steel price fluctuation comes from the growing need of industries which increases every year as emerging economies see industrial investment as a profitable market in the coming years. However, the current and frequent reasons add to the list.
1. Supply and Demand
The demand for HRC steel is closely tied to economic growth in a country. Developing countries that shifted to industrialization tend to grow their HRC steel demand to keep construction, manufacturing, and infrastructure productivity.
This additional interest apart from top HRC steel importers reflects the cyclical price fluctuation.
2. Raw Materials Costs
Iron ore, limestone, and coal are the main raw materials used for making HRC steel. Any increase or decrease in these materials’ prices will directly affect the cost stability of HRC steel prices.
Global supply and demand, government policies, production costs, and transportation also get a hand in raw materials costs.
3. Energy Costs
According to sustainability guidelines, the steel-making process is one big contributor to global warming as it uses natural gas to melt iron into steel.
As a result, steel companies revised some of their production processes to fit the guidelines thus, affecting HRC steel prices.
4. Market Competition
The rising market of other steel producers like Taiwan, Vietnam, and Mexico are growing threats to the top HRC steel exporters causing tight market competition. Over time, the market competition will become saturated which will prompt the price fall of HRC steel.
Which variables impact the price of HRC steel?
- Demand and Supply
- Raw Materials Cost
- Energy Cost
- Market Competition
- Trade Policies
Where does HRC steel come from?
Considered the most actively traded material, HRC steel is an important component in the manufacturing process like automotive, construction, appliances, and machinery.
The establishment of the first rolling mills was in the Middle East and South Asia dated 600 BC. The development of HRC steel started with an artistic legacy by Leonardo da Vinci who first created the first European variant of a rolling mill in the 15th century.
Furthermore, the industrial espionage by Richard Foley in the Swedish metal manufacturers who trustingly taught him slitting and cutting mill techniques in the 16th century culminated in a series of steel modifications that give us the refined HRC steel nowadays.
Today, top producers vary yearly but China, Luxembourg, Japan, and South Korea are steadily claiming their spots in the production chain. The United States follows distantly but maintains its position as the leading steel manufacturer in the market.
What is the future price of HRC steel?
HRC steel maintained its price hike after the rebounding of steel demand in China. However, its tailwind trend in trading charts was short-lived as the country’s economy is currently experiencing deflation, causing its prices to scale back.
Additionally, some European steel mills turned off their blast furnaces after the commodity’s price slumped. However, experts noted bullish sentiment as some automotive manufacturers and steelmakers secured contracts in the region.
Overall, HRC steel prices will be $1,537.10 per ton by the end of 2025. However, due to its volatile nature, it is always good to keep track of the production, supply side, and economic performance as they are the main determiners of HRC steel’s future prices.