ENERGY

Hormuz Histrionics & Hydrocarbon Havoc: A Perilous Persian Predicament

WTI crude oil futures surged over 1% to approximately $75.3 per barrel on Monday, scaling their zenith since January. This upward trajectory follows the United States’ precision strikes on three of Iran’s nuclear installations, embroiling itself further into the volatile vortex of the Israel-Iran imbroglio.

The escalation has ignited global consternation over Tehran’s potential reprisals, most pertinently the threat of obstructing the Strait of Hormuz, the vital marine chokepoint through which nearly 20% of global crude and 25% of liquefied natural gas are conveyed. The Iranian Parliament, in an ostentatious gesture of defiance, sanctioned the Strait’s closure; however, the decisive decree rests with the Supreme National Security Council & the nation’s Supreme Leader.

Market Movements Mired in Mideast MachinationsOil prices vaulted by approximately 2.8%, albeit retracting slightly from intraday pinnacles. The apprehension gripping markets stemmed not merely from the militaristic engagement but from the strategic vulnerability of the global energy artery, the Strait of Hormuz. Its blockade, even temporarily, could unleash a domino effect across the spectrum of global commodity pricing.

Asian equities faltered early Monday as investors absorbed the ramifications of Washington’s direct intervention in an already incandescent region. Yet, according to Reuters, markets exhibited a modicum of restraint, with no immediate cascade of panic-driven sell-offs, a muted reaction in light of the magnitude of geopolitical stakes.

Strait of Hormuz: The Crude ConduitNestled between Iran & Oman, the Strait is indispensable to petroleum powerhouses such as Saudi Arabia, Iran, & the UAE, who rely on it for maritime egress to international buyers. With no feasible alternative maritime corridor, any impairment to this passageway would perforce reroute the logistics of global oil & LNG supply chains.

The closure, should it manifest, could send hydrocarbon prices skyrocketing, reverberating through industries & economies far afield. Such a scenario augurs inflationary pressure worldwide, particularly for energy-dependent nations like India, which import a significant quantum of their crude via this narrow waterway.

Diplomatic Dilemmas & Market MicrocosmsAs the world watches with bated breath, Tehran’s calculus remains elusive. While the Parliament’s posture projects pugnacity, the final directive is ensconced within Iran’s security establishment, a body not known for impulsivity but rather for strategic ambiguity.

The week ahead holds a delicate equilibrium: a single misstep could catalyse a cascade of energy upheavals & market mayhem. Investors & analysts alike are parsing signals from Tehran, Washington & Tel Aviv, seeking to divine the next move in a geopolitical chess game whose pieces span continents & whose stakes transcend barrels & boundaries.

Geopolitical Gyrations & Gaseous Gambits Grip European Energy Equation

Volatile Values, Vexed by Geopolitics

European benchmark TTF gas prices tumbled to €40.94 per megawatt hour on June 20, 2025, registering a 1.29% drop from the previous day. Yet this marginal decline came on the heels of an 11% week-on-week rise. The dramatic weekly spike was largely fueled by geopolitical frictions between Israel and Iran, whose exchanges have escalated concerns over potential blockades near the Strait of Hormuz, a crucial artery for liquefied natural gas shipments.

Traders reacted swiftly, pricing in potential risks of regional disruption, which could squeeze global gas supply. As tensions simmer in the Middle East, European gas markets remain hypersensitive to conflict-driven volatility, especially given their increased reliance on non-Russian gas imports.

Strategic Storage & Seasonal Spending Spikes

As summer begins, EU gas buyers are racing to refill storage ahead of the mandated 90% target by November 1. This regulatory imperative, designed to protect against winter shortages, is also inflating market prices. Analysts estimate that EU nations could spend up to €26 billion to meet refill quotas this year, a sharp rise from the €16 billion spent last year.

Despite the relatively high storage levels already in place,many countries had 70–75% capacity filled as of mid-June, price pressures persist. The required top-ups coincide with traditionally cheaper summer periods, but instead, prices are spiking early due to expected tightness in LNG supply and heightened market anticipation.

Mandatory Mandates & Market Manipulation Concerns

Regulatory disclosure of refill plans, designed for transparency, may have inadvertently contributed to price escalation. By revealing strategic buying intentions early in the year, the EU likely telegraphed demand surges to the broader market. This has triggered speculative activity and created an unusual "summer premium" dynamic typically reserved for colder months.

Market experts now question whether stricter disclosure timing or more flexible thresholds might help temper volatility while still ensuring energy security. The current rigid targets may be inadvertently amplifying seasonal peaks and reducing market responsiveness.

Combustible Choices & Carbon Conundrums

Rising gas prices have begun to reshape Europe’s power generation profile. In Germany, the Netherlands, Poland, and the UK, electricity producers are shifting back toward coal-fired plants, reversing previous trends toward gas-fired generation. This transition is financially driven: coal is currently more cost-effective due to gas’s elevated prices.

While this swap offers temporary relief from soaring electricity costs, it also revives environmental concerns. Increased reliance on coal leads to a notable rise in CO₂ emissions, potentially jeopardizing Europe's climate goals amid its broader energy transition ambitions.

LNG Landscape & Global Glut Management

Asia’s milder winter has pushed spot LNG prices to their lowest levels in over six months, currently hovering around $13 per million British thermal units. This has redirected some cargo toward Europe, where buyers remain active. However, European demand remains high, supporting TTF prices in the €40 to €45 per megawatt hour range.

The interplay between Asian and European demand for LNG continues to define the market's rhythm. Though European buyers benefit from Asia’s softened appetite, logistical constraints, shipping bottlenecks, and competing tenders still cap how much relief Europe can draw from global oversupply.

Pipeline Predicaments & Supply Adjustments

Unexpected maintenance at Norwegian gas fields earlier in June briefly pushed TTF prices above €36 per megawatt hour. While the disruption was temporary, it underscored Europe’s vulnerability to even minor supply hiccups in pipeline-fed imports.

Elsewhere, Russia’s pipeline flows to Türkiye via TurkStream increased by roughly 10% in May, offering a modest but consistent stream of gas. Although Russian gas now represents a smaller slice of EU imports, flows through Türkiye, and potentially into southeastern Europe, remain an important variable for market balance.

Forecasted Flux & Fiscal Futures

Forecasts suggest a moderately bullish outlook for European gas prices. Kpler projects average TTF prices at €36.9 per megawatt hour for the current quarter, gradually rising to €38.1 over the next 12 months. Meanwhile, Fitch expects 2025's average EU gas price to hover near $12 per thousand cubic feet, translating to about €40 per megawatt hour.

Analysts cite enduring refill requirements, slow LNG infrastructure expansion, and continued geopolitical uncertainty as key upward pressures. Nevertheless, if storage mandates are revised or if Asian demand remains tepid, there is potential for easing in 2026.

Regulatory Recalibrations & Risk Readjustments

Facing an unpredictable cocktail of global dynamics, the EU may be forced to rethink aspects of its current energy policy. Flexibility in storage mandates or regional cooperation frameworks could help stabilize prices. Nonetheless, the market remains highly susceptible to external shocks, particularly those emanating from the Middle East or key supplier nations.

With the delicate balance between affordability, supply security, and sustainability still elusive, Europe’s gas sector is entering a transformative era,one driven not only by economics but also by geopolitics, climate commitments, and infrastructure modernization.

Coal’s Capricious Climb & Consumers’ Calculated Consumption Catalyze Market Currents

Surging Seaborne Supplies & Steady Stockpile Strategies

Newcastle coal futures ascended to $106 per metric ton in June, marking their highest level in four months. This rally extends a brief recovery after prices hit a four-year nadir of $93.7 per metric ton in late April. The resurgence aligns with trade data showing a five-month peak in thermal coal seaborne imports from major consumers India and China during May.

China’s National Development and Reform Commission urged power plants to replenish domestic stockpiles by 10% to capitalize on the prevailing lower prices. This strategic restocking has buoyed demand and provided a semblance of traction in an otherwise oversupplied market. However, despite the recent rise, front-month Newcastle contracts remain over 15% below last year’s levels, reflecting enduring supply gluts.

Demand Dynamics & Decarbonization Dilemmas

Chinese fossil-fuel power output declined by 4.7% year-on-year in the first quarter, driven primarily by muted power demand and an expanding portfolio of renewable energy sources. This dip underscores the delicate balance between traditional coal dependency and the accelerating transition to sustainable alternatives.

Nonetheless, the uptick in May’s imports and domestic production suggests a cautious recalibration rather than outright abandonment of coal, highlighting the energy sector’s pragmatic approach amid evolving environmental mandates. India’s simultaneous increased thermal coal import volume points to parallel demand pressures as the country manages growing electricity needs while navigating its climate commitments.

Production Proliferation & Policy Postures

China’s domestic coal production expanded by 4% year-on-year in May, consistent with earlier signals from Beijing. The government plans to augment output by 1.5% to 4.82 billion metric tons in 2025, following a record 2024 harvest. This production ramp-up aims to secure energy sufficiency and mitigate import reliance amid geopolitical uncertainties.

This strategy reflects a dual imperative: maintaining economic growth and ensuring energy security, even as policy rhetoric emphasizes decarbonization. Balancing these competing priorities remains a formidable challenge for policymakers and market participants alike.

Oversupply Overhang & Market Mechanics

The persistence of oversupply continues to weigh on Newcastle coal futures despite recent gains. Global inventories remain elevated, suppressing price recovery momentum. Furthermore, logistical constraints, particularly in export infrastructure and shipping availability, modulate supply flow and market dynamics.

Market participants remain wary, anticipating that any sustained price uptick must contend with structural oversupply and fluctuating global demand patterns, especially from China and India. The interplay of these factors perpetuates price volatility and tempers bullish sentiment.

Trade Trajectories & Import Insights

India’s thermal coal imports reached a five-month zenith in May, driven by robust power sector demand and pre-monsoon stockpiling. The nation’s coal import strategy reflects a blend of commercial prudence and infrastructural adaptation to mitigate domestic supply shortfalls.

China’s imports mirrored a similar pattern, benefiting from policy-driven stockpile replenishment directives. This synchronous behavior between two of the world’s largest coal consumers amplifies market impact and underlines the strategic significance of Asian demand in shaping global coal prices.

Environmental Emphases & Emission Endeavors

The evolving energy landscape places increasing emphasis on emission reduction, with coal-fired power plants facing intensifying scrutiny. Despite this, the current market scenario reflects a nuanced reality: coal remains a vital, albeit transitional, energy source underpinning economic stability.

The gradual increase in coal production and imports juxtaposes against ambitious renewable energy targets, illustrating the complexity of decarbonization pathways. The sector’s trajectory is thus defined by incremental adaptations rather than abrupt disruptions.

Future Forecasts & Fiscal Facets

Looking ahead, market analysts predict a cautious equilibrium for Newcastle coal prices, with moderate upward pressure offset by persistent oversupply risks. Seasonal demand fluctuations, geopolitical developments, and policy shifts will remain critical determinants.

The financial calculus of coal’s role within energy portfolios will continue evolving, balancing cost considerations against environmental obligations. Investors and stakeholders are advised to monitor inventory levels, consumption trends, and regulatory signals to navigate the uncertain landscape effectively.

INPUT MATERIALS

Iron’s Indomitable Incline & Industrial Intricacies Ignite Intriguing Insights

Resilient Rates & Robust Returns

Iron ore futures ascended to approximately 100.5 US dollars per metric ton on Friday, reaching a two-week pinnacle. This uptick reflects resilient demand in China, the globe’s paramount steel manufacturer. Blast furnace operating rates edged upward to nearly 84%, signaling sustained industrial activity despite market headwinds. Concurrently, hot metal output, a critical gauge of iron ore consumption, rose above 2.4 million metric tons this week, underscoring persistent raw material needs amid fluctuating production conditions.

Metallurgical Metrics & May’s Mayhem

Notwithstanding these promising operational statistics, China's steel output registered a 6.9% contraction in May, marking the first monthly downturn in several months. This decline emanates from intensified governmental initiatives aimed at tempering chronic overcapacity and mitigating environmental impacts within the steel sector. The resultant production restraint introduces complexities into iron ore demand forecasts, suggesting a potential recalibration of supply chain dynamics in the near term.

Climatic Challenges & Construction Constraints

Adding to the multifaceted industrial tableau, adverse meteorological phenomena have disrupted construction and manufacturing activities across China. Heavy monsoonal rains afflicted southern provinces, impeding infrastructure projects and raw material logistics. Simultaneously, extreme northern heat waves have decelerated factory operations, exacerbating supply-side constraints and creating uneven regional production patterns. These climatic vicissitudes compound the intricate balance between demand persistence and operational limitations.

Supply-Demand Symbiosis & Strategic Stockpiling

Despite weather-induced impediments and regulatory curbs, the incremental rise in blast furnace activity and hot metal production reflects a cautiously optimistic industrial pulse. Strategic stockpiling by steelmakers appears to underpin demand steadiness, aiming to buffer against future supply shocks and market volatility. This behavior indicates nuanced market expectations amid global economic uncertainties and fluctuating commodity prices.

Overcapacity Oversight & Regulatory Reverberations

China’s authoritative crackdown on steel overcapacity remains a decisive factor shaping market trajectories. By curtailing excess production, policymakers endeavor to enhance sectoral efficiency, reduce environmental degradation, and stabilize pricing structures. However, these interventions invariably affect iron ore consumption patterns, prompting miners and traders to navigate a landscape marked by regulatory vigilance and cyclical adjustments.

Regional Realities & Industrial Interplays

The dichotomous climatic effects, southern deluges versus northern swelters, highlight regional disparities influencing steel production logistics. While southern disruptions delay construction milestones and port operations, northern heat restricts furnace throughput, collectively tempering overall output. This geographical heterogeneity necessitates adaptive strategies among industry stakeholders to optimize resource allocation and maintain supply chain continuity.

Market Momentum & Future Forecasts

Iron ore’s recent price resurgence embodies market participants’ balancing act between resilient industrial demand and emerging headwinds. Analysts anticipate that forthcoming monthly data will elucidate whether this bullish trend endures or succumbs to regulatory and environmental pressures. Factors such as domestic infrastructure stimulus, export-import dynamics, and global steel consumption will critically inform the trajectory of iron ore futures.

Metallurgical Market Meanders: Mellowed Momentum & Mired Met Coal Mechanics

Asian Met Coal Market Overview

Asian metallurgical coal prices edged lower on June 20, reflecting subdued buying interest amid a bearish market outlook. Platts assessed premium low-volatile hard coking coal at $175.40 per metric ton FOB Australia, down $1 per metric ton day-over-day. The PLV CFR China price held steady at $157.50 per metric ton. Market sentiment remained feeble, hampered by sluggish demand and relatively ample supply.

Despite competitive offers of premium hard coking coal, both Australian PLV and Chinese PLV, to North Asian end-users, no deals were confirmed by market close at 5:30 pm Singapore time. One seller noted, “We offered at very competitive levels, but they did not buy from us. It is unclear whether they purchased from someone else or not.”

Indicative offers for an 80,000-metric ton cargo of Australian PLV Oaky North, loading early July, remained around $170 per metric ton FOB Australia. An India-focused trader commented on the market’s lethargy: “It’s very quiet, nothing is happening, and the outlook is not bright. Weaker steel markets and monsoon-led slowness will keep coking coal prices under pressure.”

No buying interest was reported from India, with steelmakers expressing poor sentiment. “Availability of Oaky North cargoes and Chinese PLV coals is weighing down the market,” an Indian steelmaker said.

Second-tier Coal Sellers Struggle

Canadian HCC Conuma cargoes, representing the second-tier segment, were actively offered at $128/mt FOB Canada for an 80,000-metric ton shipment loading in late July. Despite several tenders to Northeast Asian end-users, no deals were struck. “We are struggling to sell due to limited demand and low buying interest,” a Chinese seller admitted. Chinese end-users reportedly considered Canadian HCC offers but remained hesitant at the $128 per metric ton FOB Canada level.

Chinese Coke Price Cuts & Domestic Pressure

Chinese steel mills initiated the fourth round of coke price reductions, slashing prices by Yuan 50-55/metric ton. This move exerts downward pressure on domestic coking coal prices. Market sources noted some resistance among Chinese cokeries to accept these cuts. A supplier remarked, “There are still uncertainties whether this round of cuts will be finalized next Monday, as futures prices at the Dalian Commodity Exchange remain firm, and mills’ hot metal production is high.”

Indonesian FOB and Indian CFR met coke prices remained steady. Indian market participants reported inactivity as they awaited governmental announcements on met coke import quota policies.

Seaborne Coal Trading & Price Assessments

Seaborne coal trading on portside remained scarce. Small volumes of Canadian low-volatile coal Elkview traded at Yuan 1,150 per metric ton n ex-stocks. Australian PMV Goonyella C coal was offered at Yuan 1,180 per metric ton but attracted limited buying interest. Platts assessed premium low-volatile HCC ex-stock Jingtang at Yuan 1,180 per metric ton (approximately $143.03 per metric ton CFR Jingtang), down Yuan 10 per metric ton week-over-week. Low-volatile HCC ex-stock Jingtang remained steady at Yuan 1,110 per metric ton t ($133.31 per metric ton CFR Jingtang).

Atlantic Met Coal Market Dynamics

Atlantic metallurgical coal prices dipped marginally amid sluggish spot demand and ample supply. Platts assessed US low-volatile HCC at $176.50 per metric ton FOB US East Coast on June 20, down 50 cents per metric ton t day-over-day and $1 per metric ton week-over-week. The assessment reflects coal with 58% CSR, 19.25% volatile matter, 8.25% ash, and 0.95% sulfur.

Spot demand for US-origin cargoes remained muted, with numerous offers in the market. Some buyers noted availability of index-linked offers for August shipments. An end-user said, “Some traders probably took positions from miners and hence there is spot availability, causing an oversupplied market.” Some US miners noted they are sold out for most of 2025 on both low-volatile and high-volatile cargoes.

Platts assessed US high-vol A at $166/mt FOB USEC and high-vol B at $154 per metric ton FOB USEC, both down 50 cents per metric ton day-over-day and week-over-week.

Market Sentiments & Outlook

In the Asian region, demand remained lackluster, with North Asia-based end-users attempting offers but failing to close deals by market close. The combination of weak demand, competitive supply, and ongoing price cuts in coke continues to pressure the metallurgical coal complex.

Atlantic markets reflect a similar narrative: oversupply and soft spot demand contribute to minor price corrections, though long-term contracts and index-linked cargoes sustain market liquidity.

Turkish Trade Tranquility: Tentative Tendencies & Turbulent Tariff Tensions Temper Scrap

Weekly Analysis of Turkish & Global Scrap Market Dynamics

Activity in the Turkish scrap market remained notably subdued on the first working day following the five-day Eid al-Adha holiday. Both scrap suppliers & Turkish steel mills opted for a cautious approach, electing to observe unfolding market trends before engaging in transactions.

Turkish Market: Caution Prevails Amid Awaited Clarity

Turkish mills have yet to finalize their scrap requirements for July shipments. Suppliers anticipate reengagement in the near term but underscore mills’ demand for clarity on steel sales & price trajectories before committing to deep-sea cargo acquisitions.

This tentative stance reflects prevailing market uncertainties, with Turkish mills signaling reluctance to enter the market without confirmed pricing signals. Mills appear to be targeting EU-origin scrap priced below $330 per metric ton CFR Türkiye, and US-origin scrap below $340 per metric ton CFR Türkiye.

European Scrap Market: Euro Pressure & Price Movements

The euro trading at $1.142 continues to exert downward pressure on scrap exporters across the Benelux region. Notably, some exporters, particularly in France, have reduced dockside prices to approximately €245 per metric ton, while others maintain prices near €250 per metric ton delivered.

The most recent booking of EU-origin scrap was concluded at $332.5 per metric ton CFR Türkiye for HMS 1&2 80:20 grade in mid-June. European domestic scrap prices demonstrated a sideways to marginally upward trend, gaining €10-20 per metric ton. This uptick limited material availability for exporters, tightening supply.

United States: Steady Prices Amid Rising Domestic Production

Contrary to prior expectations of price declines, US scrap trading in June stabilized near May levels, buoyed by the doubling of Section 232 tariffs. The American Iron & Steel Institute reported that US raw steel production last week reached a three-year high, reinforcing mills’ scrap demand.

However, US suppliers face significant challenges in export markets. Freight rates have surged sharply amid global vessel shortages, compelling many suppliers to divert material toward domestic channels. They remain skeptical about passing these increased costs to Turkish buyers, who persistently seek price concessions.

One US supplier described the current conditions as “another awkward cycle,” predicting Turkish mills will struggle to meet target price levels demanded by scrap suppliers.

Turkish Rebar Market: Subdued Demand & Price Stability

Demand for rebar in Türkiye remained muted on Tuesday, with mills holding prices steady between $540 and $565 per metric ton ex-works. The lack of significant buying interest underscores the cautious market sentiment prevailing post-holiday.

CHINA

Property Predicament Perpetuates Pallid Prices & Pressures Pugnacious Producers

Sedate Steel Stability

Domestic steel prices in China held steady this week. Rebar was priced at $453 per metric ton, while hot-rolled coil remained unchanged at $445 per metric ton. Export prices mirrored this stillness, with rebar quoted at $450 and HRC at $445 per metric ton.

This price freeze reflects a market cautiously waiting for a signal, especially amid deteriorating construction activity, China's largest steel consumer segment.

Chinese Construction Conundrum

China’s property market continues its steady descent. New home prices declined again in May, marking the sharpest monthly drop in seven months and extending a two-year stagnation. New construction starts, the lifeblood of steel demand are down significantly, dragging rebar futures to an eight-year low.

Analysts at ING suggest that recent government support efforts are focused on clearing existing inventories, not stimulating new construction. This offers limited upside for steel demand, which hinges on fresh building activity.

Residential Realities & Rebar Reactions

“Chinese residential property sales have, at best, only just started to pull out of a tectonic five-year collapse and remain stalled around 15-year lows,” said market analyst Rennie.

Goldman Sachs also projected that demand for new homes in China will remain substantially below 2017 peak levels for the foreseeable future, highlighting a structural downturn rather than a temporary dip.

Maintenance Mood in Mills

With futures for rebar languishing and demand indicators deteriorating, many Chinese steel mills are preparing for early maintenance shutdowns. This is an effort to preempt overproduction and preserve margins in a market with minimal order flow.

The disconnect between steel output and actual end-user demand is creating a glut of supply that mills are increasingly unwilling to push forward without confirmed sales.

Policy Panacea or Palliative?

Despite recent stimulus announcements from Beijing, experts agree they lack the precision to truly revive construction-linked steel demand. The focus on reducing unsold housing stock, rather than initiating new projects, has left the steel sector in limbo.

According to ING commodities strategist Ewa Manthey, “Recent stimulus policies have focused on clearing property inventories rather than boosting new starts, which will limit the impact on steel demand as it requires new construction rather than clearing unsold stock.”

SEA

Vietnamese Volatility & Vexation Vex HRC Valuations in Vicissitudinous Voyage

Vietnamese HRC Market Falters Amid Tepid Trade & Soggy Sentiment

The Vietnamese hot rolled coil market continues its languid lull, beleaguered by multifaceted malaise. Demand remains distinctly desultory, hobbled by extraneous trade entanglements afflicting coated steel exports & exacerbated by the monsoonal murkiness enveloping domestic construction appetite.

Chinese Cargoes Continue Amid Circumvention

Despite the anti-dumping dragnet tightening around Chinese-origin HRC, volumes still trickle into Vietnamese ports. Bids for SAE 1006 HRC (2–2.5mm thickness, 1,200–1,219mm width) linger around $475 per metric ton CFR, reflecting subdued purchasing proclivities. Exemption from preliminary AD duties (ranging 19.38–27.83%) for buyers re-exporting coated products to ASEAN undergirds this thin stream.

Yet, whispers of concluded deals remained elusive last week. “Buyers want to wait,” a Ho Chi Minh City trader murmurs, mirroring widespread trepidation.

Wide-Width Wagers Continue Despite Regulatory Rumblings

Intriguingly, wide-width 3–12mm Q235-grade Chinese HRC (2,000mm) invites bids at $462 per metric ton CFR Vietnam, marginally below official offers of $465 per metric ton. Some cargoes are floated as low as $460/metric ton cfr. Speculation persists that wide-width varieties may soon be enmeshed in AD scrutiny. Still, Hanoi traders report market participants remain sanguine, gambling on regulatory inertia.

Regional Reliance: Malaysian & Indonesian Alternatives

In early June, a Vietnamese reroller secured 30,000 metric tons of Malaysian 2mm SAE 1008 HRC for July shipment at $492–493 per metric ton CFR. Indonesian 3mm base thickness offers continue at $498 per metric ton CFR Vietnam. The benchmark for SAE-grade 2–2.7mm HRC remains static at $490–495 per metric ton CFR Vietnam, reflecting week-on-week inertia.

Domestic Dynamics: Disruption & Deliberation

Homegrown pricing has plateaued, buttressed by both anti-dumping distractions & reduced supply from Hoa Phat Dung Quat. The beleaguered blast furnace,once crippled, has resumed partial operation. However, full-scale resuscitation of the 1.2 million metric ton/year facility is forecast to take several months. “They [Hoa Phat] need to ensure that the problem will not happen again,” notes a trader, hinting at latent anxieties.

Hoa Phat has reportedly allocated 300,000 metric tons of HRC for July shipment domestically, with pricing hovering near $511per metric ton CFR southern Vietnam. Rival Formosa Ha Tinh Steel echoed the pricing inertia, anchoring its July/August domestic offers at $508–518 per metric ton CFR southern Vietnam.

EUROPE

Ferric Fugues: Faltering Fortunes, Forbearance & Fiscal Fog

Sedate Steel Stability & Stagnant Sentiment

Domestic hot‑rolled coil prices across Europe saw further decline this week as buyers held back on purchases, citing ample stock and forecasts of ongoing price drops. Northern European mills initially offered July delivery at €600‑620 per metric ton ex‑works. Week on week, that eased by €10 to around €590 per metric ton, with some analysts predicting further dives toward €570 in the short term.

Italian Introspection & Irrational Incentives

Italian mills decreased offers from €580‑600 to €570‑590 per metric ton ex‑works. Activity has slowed and workable prices dipped to €550‑555 per metric ton. Although speculative bids even touched €535 per metric ton, these have not reflected actual purchase levels. Market sentiment remains weak, with plenty of room for further softening.

Import Interest Idle & Inventory Intentions

Import buying remained muted in southern Europe. Current offers for HRC products on a CFR basis range from €470‑530 per metric ton, down from €490‑540 last week. Indonesian mills offered at €470‑490 per metric ton CFR, while Indian offers at $600 per metric ton CFR, roughly €520 per metric ton, fell by €5‑10 week on week.

Global Offers & Local Lull

A confirmed ex‑India HRC deal at $610 per metric ton CFR (approx. €530 per metric ton) reportedly included extras like 2‑meter‑wide coil. Turkish suppliers quoted €515‑530 per metric ton CFR duty paid, a €5‑10 decline. Nevertheless, some offers from Turkey dropped to about $550 per metric ton CFR (approx. €480 per metric ton) duty paid, yet buyers are not committing.

Regulatory Reticence & Clearance Calculus

Many buyers are purchasing only stock they must clear before October 1, when new regulatory rules, including the Carbon Border Adjustment Mechanism, come into effect. Galvanised coil purchases have already ceased. Traders described a cautious market, awaiting regulatory clarity before making further commitments.

Market Meanderings with Measured Outlook

Despite price cuts, trade remains subdued and defensive across the value chain. Buyers continue to secure only minimal orders tied to clearance schedules. Until demand strengthens or regulatory conditions become clear, market watchers expect prices to stay under pressure through the summer months.

INDIA

Steel Sanctimony & Statutory Strictures: A Quixotic Quest for Quarantine

India’s Ministry of Steel has set the steel sector abuzz by amending its Quality Control Order, mandating Bureau of Indian Standards certification not just for finished hot-rolled coils but also for upstream input materials like hot-rolled slabs. This ostensibly procedural revision now requires global suppliers to navigate a labyrinthine compliance regime, even for semi-finished goods.

What was once a final-product approval regime has morphed into a gatekeeping mechanism for the entire supply chain, creating logistical & diplomatic ripples across major exporting nations. The move has effectively erected a formidable non-tariff barrier, altering the dynamics of India’s lucrative & rapidly expanding HRC market.

Diplomatic Disarray: FTA Nations Flummoxed by FormalismFree Trade Agreement partners like South Korea, Japan & ASEAN member states, formerly the vanguard of HRC imports into India, now find themselves entangled in bureaucratic red tape. Despite holding BIS certifications for final products, mills from these countries are being compelled to seek separate certifications for input materials, many of which are sourced from alternate plants or countries.

This regulatory convolution has blindsided FTA partners, sparking consternation among mills who had previously counted on seamless access to India’s growing market. The sudden shift in policy without transitional clarity or phase-in provisions has left importers & exporters scrambling to recalibrate compliance strategies.

Commercial Conundrum: China’s Supply Chain SidelinedChina, often at the epicentre of India’s steel import scrutiny, is also reeling from this stipulation. Several Tier 1 & Tier 2 Chinese mills had successfully obtained BIS certification for HRC, making them key players in India’s import ecosystem. However, the updated rulebook now disqualifies them from participation unless their input slabs are also BIS-accredited, an exigency that few anticipated.

Currently, Chinese HRC offers have all but vanished. Theoretical landed prices hover around $470 per metric ton CFR India (approx. INR 42,000 per metric ton including port charges), significantly below the domestic landed equivalent of INR 51,000 per metric ton. Yet, no new offers have been floated this week, a silence reflective of the sector’s mounting uncertainty.

Fiscal Flux: Fragmented Figures Foster Importer FatigueIn the wake of this regulatory upheaval, importers are in limbo. With customs clearance now contingent upon documentation for upstream slabs, many are contemplating cancellation of previously secured contracts. BIS ambiguity has paralysed new bookings, plunging trade activity into a holding pattern.

Last week, only a solitary Russian-origin HRC offer surfaced at $455 per metric ton CFR Mumbai. The most recent confirmed trade was South Korean-origin HRC booked at $520 per metric ton CFR Chennai for July–August shipment. Otherwise, the market has been characterised by inaction & apprehension, as importers await formal clarifications.

Import Inflection: Domestic Capacity Curbs Cross-Border CravingsIndia imported roughly 3.9 million metric tons of HRC in FY25, averaging around 0.3 million metric tons monthly, a 15% year-on-year uptick. Notably, HRC imports accounted for 41% of total finished steel inflows. However, this surge coincides with a domestic metamorphosis: India’s flat steel capacity has burgeoned in recent years.

From JSW Steel & Tata Steel to public sector stalwarts like NMDC, production augmentation has reduced reliance on foreign supplies. This QCO shift ostensibly serves as a regulatory shield to preserve mill margins & boost local offtake. But it may also foment structural oversupply if domestic demand does not scale proportionately.

Demand Doldrums: Automotive & Infra Apathy Undermines UptakeDemand-side dynamics remain lacklustre. Two-wheeler sales in FY25 reached 19.6 million units, still 12% below their FY18 peak. The small car segment also continues to languish, curtailing one of the key growth engines for HRC consumption.

While construction & infrastructure sectors exhibit marginal stability, they are unlikely to counterbalance the surge in domestic steel supply. The risk looms large that Indian mills may be compelled to offer deep discounts or risk swelling inventories, negating the benefits sought through import deterrence.

Export Erosion: India’s Global Grip Grows Gossamer-ThinIn previous cycles, Indian steelmakers successfully offloaded surplus inventory via exports, defending domestic price floors. However, Chinese producers have aggressively stepped up their external shipments, offering FOB HRC at $400–445 per metric ton. This puts Indian mills at a competitive disadvantage, especially once freight & logistics are factored in.

Unless Indian producers diversify their export markets or see a sharp resurgence in domestic consumption, they may find themselves squeezed from both ends, hemmed in by regulatory ceilings at home & price wars abroad.

Protectionist Paradigm: Policy Prudence or Price Purgatory?India’s steelmakers have effectively transformed regulatory architecture into a trade barrier, one that fortifies domestic markets against low-cost intrusions. But whether this QCO iteration becomes a panacea or precipitates a price purgatory remains uncertain.

While shielding domestic mills in the short term, the policy risks longer-term volatility: inflated prices, reduced global competitiveness & stagnating demand. It underscores the classic paradox of protectionism, defensive insulation at the potential cost of dynamic resilience.