ArcelorMittal expects EU trade curbs to tighten HRC market as imports retreat

• EU trade measures tighten HRC supply and support blast furnace restarts
• Lower imports, not stronger demand, lift domestic mill order books
• Returning capacity tests the durability of higher HRC spreads

Global steelmaker ArcelorMittal expects the European Union’s revised tariff-rate quota (TRQ) system, introduced on 1 July, together with the Carbon Border Adjustment Mechanism (CBAM), to tighten the regional hot rolled coil (HRC) market during the second half of 2026, supporting higher domestic HRC spreads and capacity utilisation despite relatively stable end-market demand.

Stronger order books following implementation of the revised TRQ have prompted the restart of previously idled blast furnaces and support stable-to-higher European shipments in the third quarter despite the usual seasonal slowdown, the company said.

Lower imports are driving the recovery

The EU imported around 30 mnt of steel in 2025, while under the revised safeguard regime, tariff-free quota availability has been reduced to around 18 mnt. Meanwhile out-of-quota imports now attract a 50% tariff, compared with 25% previously.

ArcelorMittal estimates the revised framework could reduce imports by around 13 mnt, with the largest reductions affecting flat steel products. The five largest HRC-exporting countries face quota reductions of around 60%, materially reducing import availability for European buyers.

The revised framework introduces country-specific quotas, tighter monitoring and mandatory “melted and poured” reporting from October 2026 to reduce circumvention. BigMint’s analysis of the revised safeguard measures also indicates lower quota allocations for major exporters of HRC, CRC and HDG, including India, alongside higher out-of-quota duties that increase the cost of supplying the European market.

Management said stronger order books following implementation of the revised TRQ supported the restart of the Dabrowa blast furnace in Poland, Asturias in Spain returned to full operation during the second quarter, and the Fos blast furnace in France resumed operations at the end of July. The company attributed the recovery to lower import competition rather than stronger underlying European steel demand, indicating domestic producers are beginning to regain market share as import availability declines.

The tighter quota regime primarily affects finished steel products, while semi-finished products such as slabs remain outside the restrictions. That is encouraging some producers to continue supplying slabs into Europe for downstream rolling, partially offsetting lower finished steel imports without materially altering the tighter supply outlook for HRC.

Capacity discipline will determine spreads

ArcelorMittal expects the revised TRQ system and CBAM to reduce import availability, tightening the regional HRC market and supporting higher domestic spreads. Group EBITDA reached $3.7 billion during the first half, while EBITDA per tonne increased to $143/t and improved further to $155/t in the second quarter. The company said the financial performance does not yet fully reflect the impact of the revised trade measures, with stronger earnings expected as the new framework takes effect through the second half.

The recovery nevertheless depends on how quickly domestic production returns. Blast furnace restarts increase available supply, while improving margins could encourage other European producers to restart idled capacity. Lower imports tighten the market, but sustained improvement in HRC spreads requires domestic production to expand more gradually than import volumes decline.

Outlook

ArcelorMittal expects the revised safeguard regime and CBAM to improve domestic capacity utilisation through the second half by reducing import availability and supporting stronger order books. The company expects European shipments in the third quarter to remain stable or higher despite the seasonal slowdown, making the second half the first period in which the revised TRQ system and CBAM operate together across a full quarter.

Whether the improvement in HRC spreads extends beyond the second half will depend on the balance between lower finished steel imports, returning domestic capacity and evolving trade flows. While the revised quota regime materially restricts finished steel imports, continued slab inflows for downstream processing could partially offset tighter supply. The broader direction of the market, however, will continue to depend on whether import reductions outpace the return of domestic production.