Although most global hot rolled coil (HRC) suppliers have continued to keep their offers stable for the third consecutive week, the HRC market globally has remained positive rather than negative, given optimistic expectations seen in some markets. A few outlets have been silent due to the approaching holidays, in Turkey and the Middle East in particular. Meanwhile, Asian suppliers have kept their prices stable, though sellers were optimistic over a revival of demand and upward movement of prices especially in such key markets as Europe, where higher prices have already appeared this week.
Most big Chinese steel producers have kept prices mainly unchanged this week. In particular, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $550-575/mt FOB, with a midpoint at $562.5/mt FOB, the same as last week, while some offers from several big mills are still heard at as high as $590/mt FOB. The tradable level has been estimated at mainly the same level as well, at $540-550/mt FOB, depending on destination, though offers from some Chinese traders have continued to fluctuate, especially in Vietnam, with deal prices heard at different levels. In the meantime, average HRC prices in the Chinese domestic market have moved up first, though they have started to indicate certain declines in some regions of China due to the widespread heavy rains and high temperatures since last weekend. Meanwhile, during the given week, HRC futures prices increased first as well, bolstering HRC prices to some extent, but the rainy weather in eastern China since last Saturday has exerted a negative impact on the demand for HRC. Domestic HRC prices in China are at RMB 3,840-4,000/mt ($535-557/mt) ex-warehouse on June 23, with the average price level RMB 25/mt ($3.5/mt) lower compared to that recorded on June 16, according to SteelOrbis’ data.
In India, HRC export prices have largely remained stable, standing at $580-600/mt FOB depending on destination, with sellers optimistic over a revival in demand and in prices in key markets, with even some higher offers heard in Europe. According to sources, the uncertainty is whether the positive or negative will set the short-term trend and this is difficult to forecast. At the same time, at least two officials at private mills said that they were close to reducing export allocations by 15-20 percent for the July-September quarter as any rebound in market conditions would only have an impact on the export trade in the third quarter of the current fiscal year.
In Vietnam, following offers for ex-China SS400 HRC at $545/mt CFR Vietnam at the beginning of last week, several big cargos were signed at around $555-560/mt CFR Vietnam at the end of last week, while this week a few batches have been sold in Vietnam at $548-550/mt CFR. At the same time, by the end of the week, most offers for ex-China SS400 HRC have been reported again at $540-545/mt CFR due to the continuous fluctuations in futures prices. Furthermore, another deal for 20,000 mt of ex-China SAE1006 HRC have been reported in Vietnam at $565/mt FOB, which corresponds to around $575/mt CFR. At the same time, most offers for ex-China SAE1006 HRC have been voiced at $580/mt CFR. According to sources, Vietnam has bought around 70,000 mt of Chinese HRC, both SS400 and SAE1006, since last week, mainly in order to replenish stocks, while the future trend still lacks clarity. The SteelOrbis reference price for imported SAE1006 HRC in Vietnam has moved to $575-580/mt CFR, from $570/mt CFR, given new deals signed at the lower end of the range and higher offers coming from most suppliers.
Sentiment has improved in the European HRC market as market insiders agree that HRC prices have reached the bottom and are going to increase. In the import segment, no offers have been voiced at below €600/mt CFR anymore, with higher offers reported by several suppliers at around €610-620/mt CFR, though many are refraining from new offers so far, waiting for a clearer market picture first. According to sources, achievable spot prices are at €650-680/mt ex-works, with the lower levels being recorded in Italy and the higher levels in northern Europe. Meanwhile, higher offers at €700-710/mt ex-works have been voiced from mills in northern Europe. Sources said that buying activity has remained generally limited with only occasional volumes being traded, while European mills have kept negotiating contracts with the automotive sector for the second half of this year.
HRC market in Turkey has been quiet due to the pre-holiday lull and the trading activity has been minimal this week. Still, the mills have voiced higher domestic offers, aiming to rather make a statement to the market than to actually sell. The limited allocation for August from some suppliers is one reason for such a situation, while stable and high scrap is another one. As a result, the local HRC prices in Turkey have been voiced at $690-710/mt ex-works, $10/mt up over the week. However, the buyers believe these official offers are not workable just yet and assume that $670-680/mt ex-works levels would be still achievable. Such assumptions are also based on the slow exports and lower prices from Turkey to overseas markets. Despite a certain upturn in the EU market, ex-Turkey export offers are still at $630-650/mt FOB with no sizeable bookings heard around.
Less aggressive import offers of HRC to Turkey is another supportive factor for the high domestic prices. China’s prices are still hovering around $590-595/mt CFR and up to $600/mt CFR in some cases while $580-585/mt CFR levels are considered reachable. India is at around $625-630/mt CFR which is not workable at the moment. Russia, which in theory could have provided the low price levels, prefers to concentrate on the domestic sales, where prices are profitable and the supply is limited.
In UAE, the lack of trade activity has persisted mainly because of the insufficient end-user along with the holiday mood related to the approaching Eid holiday. As a consequence of the continued decline in business activities in the UAE, most of the major Indian mills have chosen not to offer and wait until after the holiday to start offering again. However, certain booking deal speculations have been reported this week from India to GCC about $570-577/mt FOB which is approximately $605-612/mt CFR to GCC though not confirmed and commented on by market participants possibly be the previous week's purchases. Meanwhile, ex-China HRC offers for shipment in July-August have notably remained the same since last week at $590-600/mt CFR. In addition, despite the fact that the majority of market participants said that ex-Japan had previously sold some lots to the UAE for approximately $550/mt CFR and is no longer in the market, according to the most recent market analysis, Japan should be making offers to the UAE for at least $570-600/mt CFR. In contrast to previous offers, South Korean suppliers have opted to make an effort to boost offerings to the UAE by $5/mt to $640/mt CFR for shipments in August.