Steel Coil Price: A Shanghai Benchmark Changes Contracts

On 27 October the London Metal Exchange launched its Steel HRC Shanghai contract, traded as HS, cash-settled in 10 tonne lots and quoted in dollars with maturities to 12 months. It is the first time the Shanghai Futures Exchange has licensed a metals price to another exchange, and 2,513 lots cleared on day one, according to LME data reported by SteelOrbis on 28 October.

For a coil buyer this is not a trading story. It changes what a steel coil price is argued against: until this week a European buyer and a China steel supplier negotiated against two private assessments and a freight quote; now a public, dollar-denominated curve carries Chinese supply expectations. Useful, but incomplete: the physical market moved for reasons the curve does not carry.

A benchmark launched into a demand downgrade

World Steel Dynamics expects 2026 global steel demand considerably below the World Steel Association forecast, with China’s apparent consumption down almost 6.5% through August, chief executive Philipp Englin said at the Steel Networking Summit in Istanbul, as reported by Kallanish on 29 October.

The detail that matters for flats sits underneath. Chinese finished steel exports receded slightly this year, but including semi-finished products they grew again in 2026, largely substituting for Iranian semis. China can refill a supply gap quickly, so semi-finished availability increasingly sets the marginal cost of the flats made from it.

The US shows the same mechanism. Sheet imports are approaching an annualised 8 million tonnes from roughly 5.5 million, while slab imports have jumped to almost 8 million tonnes annualised against a traditional 3.5-4 million, WSD said, creating what it called “a massive arbitrage opportunity for the re-rollers”. When a re-roller buys slab and undercuts an integrated mill, hot rolled coil (HRC) quotes track substrate, not mill cost.

Europe: prices rising while demand stays flat

Europe is running the opposite experiment. Fastmarkets’ daily HRC index, domestic ex-works Northern Europe, was €753.75/t on 26 October, up €4.75 day on day from €749 on 23 October, €5 week on week and €12.08 month on month; Italy was €741/t, down €0.88 week on week. Northern mills were heard at €800/t delivered (€780-785/t ex-works), with the highest concluded deal at €760/t ex-works (EUROMETAL, 27 October).

WSD called it “almost astounding” that European prices had not improved further given the fall in imports, citing weak demand or inventory liquidation, and still sees upside as imports fall and supply is cut.

Plate has not followed. Fastmarkets assessed domestic plate 8-40 mm at €840-880/t ex-works Northern Europe on 22 October, unchanged week on week, while McCloskey by OPIS put Northwest European heavy plate at €860/t ex-works and German delivered material at €870/t. Italian producers already quote €770-780/t ex-works for January 2027 — forward, not traded (EUROMETAL, 26 October).

The cost layer the index cannot see

Carbon is now a line item with a date attached. For material cleared in the first quarter of 2027, importers must hold CBAM certificates covering at least 50% of their liability before each quarter ends. Because emissions verification is retroactive, that interim liability is assessed on default values, and McCloskey by OPIS estimates the default-value cost of a 2027 Chinese slab import could exceed €200/t at a certificate price of €80/t. A curve does not price that; a clause does.

What to specify, product by product

When the reference is financial and the cost layers are regulatory, specification is what a buyer still controls. Buy by grade and gauge, not index:

Hot rolled coil — S235JR and S355JR, thicknesses commonly supplied from 1.5 mm to 25 mm, pickled and oiled where surface condition matters downstream.
Cold rolled steel coil — DC01 to DC04, including DC01EK and DC04EK enamelling grades, generally 0.3-2.0 mm. Grade choice, not the index, decides whether a switchgear cabinet forms without orange peel.
Medium and heavy steel plate — S235JR and S355JR in the 8-40 mm band assessed above, plus heavier sections for structures and energy equipment. A steel plate supplier quoting cut-to-size removes a processing step.
Steel plate cutting parts — profile-cut and bevelled components, where value sits in tolerance and edge quality rather than in the tonne.
Galvanized steel coil and prepainted steel coil — zinc coatings Z120 to Z275 with RAL-matched topcoats for doors, refrigeration and steel furniture.
CRGO electrical steel — grain-oriented grades in the 0.23-0.30 mm range, such as 23Q110 and 27Q120 cores, where core loss is the figure actually tested.

Ranges are commonly supplied and subject to mill availability and the final mill test certificate. Listings sit on the product range page, with sheets for cold rolled steel coil and CRGO electrical steel.

Our view: contract the conversion, not the index

Separate the reference from the premium. Write index plus conversion plus freight plus duty and carbon, each defined. When one all-in number is agreed instead, a €5 move in Shanghai silently reprices the mill’s conversion, and the argument arrives at shipment, not at order.

Fix origin and mill at order. Melt and pour, heat number and the test certificate decide whether material clears, and whether CBAM is declared on actual or default values. As a steel coil supplier we collect certificates before booking, and would rather lose a week than ship a coil whose origin cannot be evidenced at the border.

Split tonnage by grade, then by date. Commodity HRC, DC04 and CRGO share neither a lead-time profile nor a mill programme. Allocating quarterly by grade, with inspection before shipment, has proved more reliable for steel structure, switchgear, transformer and appliance customers than optimising one blended price.

We trade cold rolled, hot rolled, galvanized and prepainted coil, plate, cut parts and electrical steel from mills including Baosteel, Anshan and Wuhan.

Next step

Planning Q1 2027 tonnage against a moving benchmark? Send grade, gauge, width, destination port and the document set your customs broker will ask for, and we will return a specification-matched offer with reference and premium shown separately. Start with the product range, read about our company, or contact us. More market notes: our news list.

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