Global View on HRC: Some small price rises in select markets despite weak demand

Though the overall global HRC market has been rather stable this week, in some outlets suppliers have been trying to increase prices. This has been facing strong opposition from buyers as demand in Asia has remained weak and the plum rainy season has started in China, while in the MENA region customers have been strongly opposing higher levels in general and trade in Europe has stalled ahead of the implementation of the new quotas.

The prices for boron-added SS400 HRC from large Chinese mills have been mainly heard at $515-516/mt FOB, which is up by $3/mt on average from last week. Some big mills like Angang and Benxi are offering stable prices, but $510/mt FOB for a mill could be workable if the quantity is large enough. So, this increase is very shaky and most of the stronger sentiment has come from the non-VAT HRC business, where the situation has again changed completely. A non-VAT lot of 30,000 mt has been held by the Chinese government at port since late last week, so the new wave of inspections has resulted in the disappearance of all non-VAT offers. This may also affect already signed non-VAT contracts as sellers will be affected by additional transportation costs and deadweight loss charges. While last week non-VAT HRC prices were assessed at $485-490/mt FOB, this week all players polled by SteelOrbis confirmed that offers are starting from $500/mt FOB and all are for VAT-included materials. 

Ex-India HRC prices have officially been kept unchanged, but large mills under pressure from the domestic slowdown have still been rather flexible, though any additional significant discounts have not been available this week. Most low-priced offers have been at $530-540/mt FOB for Southeast Asia and some other markets, while the level for the GCC is at $550/mt FOB officially and for Europe the indicative level is $580/mt FOB, though offers could be higher. One Indian mill is heard to have signed a contract for 25,000 mt to an undisclosed destination at $520/mt FOB, but this could not be confirmed in any final destination, and the price is assessed as being on the low side. In most major sales destinations, Indian mills sold sufficient volumes during across a certain period of time, even though they still have August shipment allocations for exports. The Indian local market is rather stable in terms of prices, but demand Outlook is very week as India is entering monsoon season.

In Turkey, local and export HRC prices have declined over the past week due to pressure from low demand and falling scrap prices. As regards exports, Turkish mills are forced to be aggressive in order to attract the attention of European buyers, who have been reluctant to book lately due to the uncertainty surrounding EU quotas. The realistic HRC export prices from Turkey are currently at $600-610/mt FOB for August and September shipments, down from $625-630/mt FOB in official targets. Some transactions have been reported at $600-605/mt FOB to non-EU countries in Europe, while some bids from larger buyers in southern countries in the EU have been reported at as low as $580/mt FOB. These levels have been rejected by Turkish suppliers, but market sources generally feel that $590-595/mt FOB base can be accepted for serious orders. In North Africa, according to sources, some deals for Turkish HRC have been closed at around $600/mt FOB for a decent volume. Import offers from China to Turkey have been at $550-558/mt CFR Turkey for August-September shipments, with non-VAT offers once again eliminated from the market, while no fresh negotiations have been reported. Russian, Egyptian and Malaysian HRC suppliers have remained out of the Turkish market.

In North Africa, ex-Egypt HRC indications have remained at around $615-625/mt FOB, with the lower end mainly heard in offers to Turkey. However, the supplier’s allocation is still quite limited. Local HRC prices in Egypt, according to some sources, have increased by EGP 1,000/mt ($18/mt) to EGP 40,000/mt ($703/mt) ex-works, based on $1 = EGP 49.92. However, not all market players confirm this development, while the situation may gain clarity on June 21. Ex-Algeria HRC offers for Africa are now at $630/mt FOB, down from $640-650/mt FOB last week, while for the EU the indications are stable at $680-690/mt FOB. The local official price for HRC in Algeria is at DZD 108,000/mt ($680/mt) ex-works, but some discounts DZD 2,000-3,000/mt ($15-20/mt) are applicable, specifically for large governmental project. HRC imports in Algeria are currently on hold since buyers are in the process of obtaining import licenses for the second half of the year. In Egypt, the workable prices from Turkey are at around $620-625/mt CFR, while China has been offering at $580-590/mt CFR.

In the GCC, hot rolled coil buyers have continued to assess available offers this week, with purchasing activity remaining largely driven by immediate requirements. While trading interest continues to be observed, market participants have generally refrained from taking large positions, preferring to maintain a cautious approach amid ongoing uncertainties. As a result, most offer levels have remained broadly stable compared to the previous week, although some firmer indications have emerged from Chinese suppliers. Chinese SS400 offers for August-September shipment in the UAE are still heard at $580-600/mt CFR, while SAE1006 offers have edged up to $535-550/mt FOB, equivalent to around $585-620/mt CFR GCC. Meanwhile, workable ex-India HRC levels remain at around $600-610/mt CFR UAE for July shipment, following last week's sizeable booking, with fresh August offers expected next week.

In the European Union, negotiations in the import HRC segment have almost been at a standstill, as clarifications regarding the import quota issue are expected to be announced in the coming 10 days, after which negotiations will resume. In the meantime, the DDP-based offer price range is reported at €670-710/mt depending on the origin, while on spot basis there are hardly any offers. Turkey has dropped its FOB price to $600-615/mt FOB (in the prices of some mills), which equals around €580-610/mt CFR duty paid, depending on the supplier. Some small lots have been booked from Turkey to the non-EU countries at $600-610/mt FOB. Local HRC prices across the EU have mainly stabilized, at €680-710/mt ex-works depending on the region, with some deals done this week at €675-690/mt ex-works in southern Europe and in the northern part of Europe. Market players are quite confident that in the coming 10-15 days local HRC producers across Europe will increase their offers to around $715-750/mt ex-works depending on the country.

The SteelOrbis reference price for imported SAE1006 HRC in Vietnam has added $5/mt on average over the past week to $555-570/mt CFR, with the midpoint at $562.5/mt CFR, and with one ex-Taiwan deal signed at $562/mt CFR. Also, no additional discounts and some firm offers from India have added to the situation. Official Indonesian SAE1006 HRC offers have been at $570-572/mt CFR, up by $2/mt. But in the ex-China HRC segment, Vietnamese buyers are somewhat confused. A deal for 3,000 mt of Chinese SPHC pickled and oiled coil was heard at $573/mt CFR, down by $2-3/mt from the previous contract for the same grade a week ago. But later in the week an offer for 1 mm CRFH has been heard at $563/mt CFR for September shipment and this has been assessed as “extremely low and unrealistic”, sources said. Moreover, one contract for 15,000 mt of Chinese Q195 HRC has been rumored at $505/mt CFR, but this could not be confirmed by the time of publication and most sources in Vietnam polled by SteelOrbis agree that it is either a contract signed earlier or it has some special conditions or is simply not true, as th eprice for this grade with VAT should be at $510-515/mt CFR at the lowest.

Though Vietnamese buyers have been actively resisting any rises for Chinese coils, exporters have managed to sell some volumes to Pakistan. A deal for Chinese Q195 HRC has been reported at $525/mt CFR Pakistan, up $10/mt from the level seen in a sale two weeks back. At the same time, some volumes of Q235 3-12 mm HRC have been traded at $528-530/mt CFR. This reflects more the situation in China than in Pakistan, as non-VAT offers are gone. Offers for ex-China SAE1006 HRC have been reported at $545-550/mt CFR for August shipment, up by $5/mt over the past fortnight. 

Russian HRC producers continue to refrain from distant export destinations, remaining focused on Iran where they can sell material at $560-570/mt FOB Astrakhan, and focusing on sales to nearby CIS markets with workable prices reported at the equivalent to $515-520/mt FOB and up to $530/mt FOB. In the domestic market, the initial prices for June production HRS in Russia stood at RUB 59,000-60,000/mt ($665-675/mt) CPT for thin material and RUB 59,000/mt ($665/mt) CPT for thick material. Later, taking into account the stronger demand, prices were gradually increased to RUB 60,000-61,000/mt ($675-685/mt) and RUB 62,000-63,000/mt ($695-710/mt) CPT, respectively.