During the second week of August, business activity for HRC has failed to recover in most regions globally considering the continuing weakness of demand in most outlets. At the same time, in Asia, although both Chinese and Indian steel mills have mostly maintained their offers at unchanged levels, the mood has worsened due to the sharp drop in HRC futures prices in China, while actual business activity has remained slow. In Europe, the HRC market is still in its slow summer period, while local tradable prices have softened given the lack of demand.
Although most Chinese HRC mills have mostly maintained their offers for boron-added SS400 HRC at $570-580/mt FOB, the same as last week, the tradable level has been corrected down by $5-10/mt week on week to $540-560/mt FOB given the continuing pressure from falling futures and local HRC prices. Heavy rains in northern China have negatively affected construction activities and transportation, while demand for HRC has also slackened. At the same time, a wave of high temperatures has hit southern China, exerting a negative impact on market sentiments. Thus, local HRC prices in China are at RMB 4,050-4,070/mt ($560-563/mt) ex-warehouse on August 10, with the average price level RMB 50/mt ($7/mt) lower compared to that recorded on August 4, according to SteelOrbis’ data.
In Vietnam, a negative mood has been prevailing in the HRC import market as Chinese prices have dropped further. Specifically, offers for ex-China SS400 have settled at $555/mt CFR, down by $5-10/mt since the end of last week. According to sources, around 10,000 mt of ex-China Q195 HRC have been booked in Vietnam at $550/mt CFR. Besides, a few more lots for 5,000 mt in total of ex-China Q195 HRC are reported to have been sold at $554-555/mt CFR Vietnam this week. Meanwhile, offers for ex-China SAE1006 HRC from Chinese suppliers have been rare this week, with the indicative level standing at $580/mt CFR, down by $5-10/mt week on week, while most buyers expect deal prices to drop to $575/mt CFR. The SteelOrbis reference price for imported SAE1006 HRC in Vietnam, based mainly on the most competitive ex-China offers, has come to $580/mt CFR on August 11, compared to $580-585/mt CFR last week.
HRC supply has remained limited in India amid several plant maintenance shutdowns until the end of August, while local sales prices have been hardening. Ex-India HRC prices have settled at $585-620/mt FOB, the same as last week, though, according to sources, there have been very limited offers for ex-India HRC as “only Tata Steel has been heard in the export market”. At the same time, most market insiders agree that Indian mills, especially those in the west of the country, are targeting higher prices at $630-635/mt FOB given the stronger support from the local market. Some occasional sales have been reported for ex-India HRC at $630/mt FOB Nepal. At the same time, most offers in the Middle East and Turkey are still estimated by buyers at around $620-630/mt CFR. Meanwhile, buying activity in the EU has continued to remain muted during the current holiday season.
In Europe, official HRC offers from local mills both in Italy and northern Europe have been estimated at €670-700/mt ex-works, which is considered unworkable in the region. However, compared to early August, tradable prices have decreased by €10/mt on the lower end of the range, to €630-650/mt ex-works. More specifically, achievable prices are currently in the €630-640/mt range in the Italian market and mostly at €640-650/mt in northern Europe, all ex-works. At the same time, trading activities have been very quiet in the past two weeks, both in the northern and southern markets, where many players will resume their activities only at the end of the month.
Turkish HRC producers have once again raised their official domestic offers, following the discounts provided earlier to $640-660/mt ex-works base. Some deals for medium tonnages were closed within this range and slightly below. Since then, the mills returned to $660-670/mt and up to $680/mt ex-works base in official domestic offers, claiming they are sold out for September deliveries. In addition, import scrap prices have started rebounding, providing some support, while the price expectations in the flats segment for the end of August and September are generally positive. The relatively inactive import HRC segment in Turkey has also provided some support for local HRC pricing and trade. China has decreased the official offers by $5-10/mt over the past week to $600/mt CFR for material of Q195 grade of 3 mm and higher for September shipments. Although additional discounts are considered applicable, Turkish buyers are not in a rush to book due to long lead times, while considering the offers to be on the high side.