European HRC prices have moved higher so far this year, rising by about €100 per tonne since the start of the year, according to analysis from Bank of America. The firm points to a mix of policy and cost pressures - notably the Carbon Border Adjustment Mechanism (CBAM) - along with resilient demand and rising energy and shipping costs as the core drivers of the increase.
Bank of America reported that hot-rolled coil prices averaged near €660 per tonne in the first quarter of 2026. That average represented a roughly 10% year-over-year increase, equivalent to about €60 per tonne. Spot HRC prices have continued to firm since then, approaching €700 per tonne and standing about €100 per tonne higher than average levels seen in the fourth quarter of 2025.
On production, European Union steel output was broadly unchanged in the opening months of the first quarter. World Steel Association data referenced by the analysts showed EU steel production down 2% quarter-over-quarter and down 1% year-over-year over the first two months of the quarter.
Demand signals were mixed but generally supportive. Construction activity displayed signs of improvement, with both building permits and construction confidence on the rise, although the pace of improvement has slowed compared with earlier quarters. Vehicle production was stable in the early months of the year but slowed in March.
Bank of America quantified part of the recent HRC price move, estimating that roughly €20 per tonne of the increase can be attributed to higher energy costs. The analysts also noted that imported steel faces elevated production costs. Feedback from a China steel fieldtrip cited by the firm suggested that rising shipping costs are contributing to a more regionalized structure in global steel markets.
Reflecting the faster-than-expected increase in benchmark prices, Bank of America upgraded its steel price forecast. The bank now projects HRC at €730 per tonne in 2027, which it describes as about €30 per tonne higher than current levels. The firm links this revision in part to the implementation of a tariff rate quota scheduled for July.
Under the bank's revised price deck, there is an implied further upside of around 6% to fiscal year 2026 consensus EBITDA for ArcelorMittal (NYSE:MT), according to the analysts' calculations.
Context and implications
- Policy measures such as CBAM and tariff rate quotas are playing a clear role in reshaping regional price dynamics for steel.
- Higher energy and transport costs are directly feeding into benchmark price moves, with an estimated energy-related component of about €20 per tonne.
- Activity in construction and automotive sectors is relevant to near-term demand, with construction permits and confidence improving and vehicle output easing in March.