Though Japanese HRC exporters have managed to avoid very big declines in prices over the past few months, rising availability and strong pressure from other suppliers, from China in particular, have exerted significant pressure on ex-Japan HRC prices. As a result, prices have fallen sharply so far in May and the outlook is not very promising at least for one month ahead.
Prices for ex-Japan SAE1006 HRC for the Asian region have slipped to $870-890/mt CFR in mid-May, with the lower range corresponding to the spot offers to Vietnam, while the higher end reflects the official level from one of the major mills to other Asian countries, like Pakistan and Bangladesh. This means that prices have lost $140/mt on average over the past month. “Japanese mills would not like to offer below $800/mt FOB, while Chinese mills are now aggressive, since their domestic demand is low and the yuan is depreciating,” a Japanese trader told SteelOrbis.
In the meantime, ex-Japan HRC offers to southern Europe have been heard at €920/mt CFR, compared to €1,150/mt one month ago. “Japanese suppliers have been selling significant volumes of HRC into Europe since February, but now demand is very slow there and most customers refrain from purchases, expecting prices to drop further,” a market insider stated.
Furthermore, ex-Japan coils to South American customers have been offered at around $950-1,000/mt CFR Pacific coast, down by $200-250/mt over the past month, though the allocations are limited for this destination and this level does not reflect the real market for now, sources said, as offers from China have already been heard at $900/mt CFR Pacific coast this week.
