The rapid drop in hot rolled coil (HRC) prices globally has continued this week with the sharp downtrend in Asia remaining the main driver. China has posted sharp declines during the week due to the continuous drop in futures prices. India has had to join China, cutting prices by $35/mt week on week, though with a lack of success in all main destinations. In Turkey, the downtrend has also accelerated, given ex-Russia HRC deals signed at least $70/mt lower compared to deals in early July. Besides, the Turkish market is actively discussing non-confirmed aggressive HRC offers from China.
In China, HRC exporters have continued to lower their prices this week given the big declines in local and futures prices, coupled with bearish sentiments and slack demand. Export offers for boron-added SS400 HRC given by major Chinese mills have settled at $590-615/mt FOB for August shipment, down by $42.5/mt week on week. Besides, the outlook for steel prices remains rather negative at least for the coming weeks due to bad weather conditions coupled with the continuing Covid-19 pandemic in China and extremely weak demand overseas. Meanwhile, the tradable level for ex-China SS400 HRC has been heard at $550-600/mt FOB, depending on the destination, down by $30-50/mt week on week. In particular, the lower end of the range corresponds to Chinese traders' offers in position to Vietnam, which have settled at $580-590/mt CFR, down by around $50/mt over the past week. At the same time, demand in the higher-priced destinations has continued to slow down. Chinese SAE1006 HRC suppliers have decreased their offers to Vietnamese customers by $40/mt week on week to $610-620/mt CFR. Besides, ex-China SAE1006 HRC have been offered at $630-640/mt CFR to the Middle East, while offers for SAE1006 1.2 mm have also been reported at around $690/mt CFR, down by around $30/mt week on week. Domestic HRC prices in China are at RMB 3,790-3,830 ($560-566/mt) ex-warehouse on July 22, with the average price level RMB 90/mt ($13/mt) lower as compared to July 14, according to SteelOrbis' data.
In Vietnam, the weak demand for finished steel products in the local market coupled with falling import HRC prices has continued to put pressure on sentiments. In particular, among the lowest offers for import HRC are ex-China position cargoes for SS400 HRC at $580-590/mt CFR and for SAE1006 HRC at $610-620/mt CFR, down by $40/mt week on week. Meanwhile, offers for ex-India boron-added HRC through traders have settled at $600-620/mt CFR, though, according to market insiders, some Indian traders have decreased their offers to $580/mt CFR. However, indicative HRC offers from Indian mills have still been reported at $630/mt CFR Vietnam and some even higher. As a result, the SteelOrbis’ reference price for imported SAE1006 HRC has moved to $600-615/mt CFR, compared to $610-620/mt CFR at the beginning of this week. Furthermore, this week, the second largest HRC supplier in the country, Hoa Phat Group, dropped its HRC prices by $80-90/mt month on month to VND 14,400/mkg ($615/mt) CIF, mainly for September deliveries.
Indian exporters of HRC have had to cut prices further to $575-620/mt FOB this week with the midpoint at $597.5/mt FOB, despite previous hopes that markets may be near a bottom. Given the continued weakness in the Asian region and tough competition with Chinese HRC suppliers, some Indian sellers have agreed to lower prices, with buyers demanding that the benefit of the weak local currency be factored into the selling price. Though most mills are not willing to give firm offers at below $600/mt FOB, the lower end of the mentioned range corresponds to offers reported to Vietnam, and market sources believe that mills are ready to sell at this level if they see demand for any sizable tonnage. The higher end of the range corresponds to Indian offers to Europe, having slipped further from $630/mt FOB reported earlier this week.
While Ukraine stays away from distant sales outlets and prefers to deal with buyers from southeast Europe for its flats material, Russia is still forced to export and to conclude deals at a significant discount. Taking into account the toxicity of this origin and related risks, Turkish mills have managed to push for $620-630/mt CFR in deals for significant tonnages. According to sources, two mills sold a total of 80,000 mt of HRC from Russia within this range, while before the holiday their targeted levels were at $690-700/mt CFR and above. In addition to Turkey, they are trying to sell to Egypt at $670-680/mt CFR. The main problem for Russian mills in terms of exports is still payment and finding a bank and insurance company ready to work with Russian cargoes.
In Turkey, where the mills increased the HRC prices before the holiday, the uptrend failed to be sustained. One reason is the weakening scrap segment, another is that the collapse of the flats market in China has adversely affected the mood of buyers. They are concerned that Asian HRC suppliers will come to the Turkish market with aggressive offers, similar to what happened in previous times. As a result, local demand has been diminished although the mills in Turkey are trying to keep their prices at $700/mt ex-works and above. As for Asia, India is at $650/mt CFR and $620-630/mt CFR may be possible. As for China, most players are trying to assess the possible levels and, while mills are at around $670-680/mt CFR, traders are reportedly fishing at up to $600/mt CFR. Export offers from Turkey dropped from $715/mt FOB to $690-705/mt FOB and $10/mt discounts are considered possible.
In Europe, buying activity in the HRC market has remained generally limited with only small volumes being traded, though some optimism has come to the market as restocking activities by distributors are awaited. Achievable spot prices have settled at €770-900/mt ex-works, with the lower levels being recorded in Italy and the higher levels in northern Europe. More specifically, Italian mills have settled their prices at €780-900/mt ex-works, though traders have been mainly offering at €770-780/mt ex-works, up by €20/mt on the lower end of the range week on week. Meanwhile, higher offers at €880-900/mt ex-works have been voiced in northern Europe, though tradable levels have remained lower in a range of €850-860/mt ex-works. In the import segment, trade activity has remained generally weak, while most offers to southern Europe have settled at €710-760/mt CFR, depending on the origin. The lower end of the range corresponds to ex-India offers for boron-added coils at €710-720/mt CFR, compared to €715-730/mt CFR last week. However, according to market insiders, several deals for ex-India material have been reported at $710-720/mt CFR (€698-708/mt CFR) this week. Apart from deals for ex-India materials, a deal for around 25,000-30,000/mt of ex-Egypt HRC has been reported at $730/mt CFR southern Europe (around €717-720/mt CFR) this week. At the same time, by the end of the week, much talk about a sharp drop to around €700/mt CFR and below in import HRC prices from Asian suppliers has started to circulate in the market.