The global hot-rolled coil (HRC) market has been mainly positive this week, mainly due to the uptrend in China. The stronger offers ex-China have supported the other suppliers in Asia, which in the end has resulted in less aggressive HRC offers to the key consuming markets, such as the GCC, Turkey and the EU. Following this development, Turkey has increased local prices, while the EU is inactive currently due to the upcoming holiday period, although suppliers maintain their positive sentiment. Another reason for the low activity is the almost full utilization of the third quarter import quota and fears that the quotas for the next period will be filled quite fast.
Chinese HRC exporters have increased their offers for SS400 HRC this week by $15/mt to $565-585/mt FOB amid the upward trend in the domestic HRC market supported by increasing HRC futures prices and the rising trend of raw material prices. However, several deals have still been heard from mills at last week’s levels ($560/mt FOB from mills) as buyers keep pushing for discounts. The tradable level for ex-China SS400 HRC added $10/mt to $550-565/mt FOB, with the lower end of the range confirmed in a deal to Vietnam, while in most other destinations it was hard to find anything below $560-565/mt FOB. The Chinese government is expected to issue more policies to boost economic development, especially the rehabilitation of villages in urban areas, which will stimulate the demand for steel and which has already supported market prices in China this week.
The uptrend has been seen in the import HRC market in Vietnam as well. While some Vietnamese buyers have continued to push for additional discounts from traders who are selling without VAT, most sources believe higher prices will be seen in new deals in the short run. Offers for ex-China SAE1006 HRC have been voiced at $585-590/mt CFR, as compared to deal prices at $565-570/mt CFR last week. However, according to sources, some Vietnamese buyers have kept negotiating at $575/mt CFR. Only traders who sell without VAT could accept this level. Offers for ex-China SS400 HRC have been voiced at $565-570/mt CFR, up by $5/mt over the past week, though several deals have been reported at $560/mt CFR, versus $550/mt CFR last week, for ex-China materials sold by traders who are dealing within the scope of the non-VAT trading policy.
Imports of HRC in India have increased this week given lower allocations in the domestic market due to a maintenance shutdown at one of the biggest Indian steelmakers, JSW Steel, coupled with more competitive import coil prices compared to local offers. Thus, according to market sources, at least 100,000 mt of import HRC have been booked this week. Specifically, two deals from Chinese traders for 17,000 mt and 20,000-25,000 mt, respectively, are reported to have been booked by Indian customers at $610-615/mt CFR for September shipment. Furthermore, according to sources, a Vietnamese producer has sold around 65,000 mt in total of HRC at $612-615/mt CFR.
Ex-India HRC prices have remained relatively stable, but market participants claimed this to be “notional” as mills were largely holding back from submitting offers owing to uncertain price trends in most key destinations and market activity has barely been kept alive by stray deals of “emergency buying” by a few Europe-based distributors. Specifically, ex-India HRC prices have largely settled at $570-615/mt FOB, versus $565-615/mt FOB last week. According to sources, ex-India HRC is less available at the moment due to JSW Steel’s production problem, a maintenance shutdown in particular, due to which they lost tonnages. According to the sources, EU tariff quotas are nearly exhausted, and the modest-volume deals were from distributors needing to meet emergency supplies as some mills in Europe are starting maintenance shutdowns during the upcoming holiday season, leading to some tightening in local supplies.
In Europe, the general offer level for HRC across the EU is at €670-700/mt ex-works in the official offers, while the workable levels are at €640-650/mt ex-works in Italy and €650-670/mt ex-works in the north. Some of the suppliers are already aiming to increase prices, counting on a demand rebound after the holidays. In the import segment, a majority of offers are at €590-630/mt CFR from Asia mainly, depending on the region, while the lowest price has been reported from Vietnam at €580/mt CFR. No import activity has been seen this week, mainly as the market is getting ready for the holiday period. Another major reason is that the quota for the EU is almost filled, and market players believe that the cargoes which are to arrive in July, August and September will wait for customs clearance until October 1. That could result in most of the available quota for the fourth quarter immediately being used up and in its turn support local HRC pricing in the EU.
The Turkish HRC market has rebounded this week in domestic offers from $630-650/mt ex-works earlier to $650-670/mt ex-works and up in the new offers for September deliveries. The key reason is not demand, which is still rather slack in the local market, but the less aggressive stance of China. Particularly, ex-China offers have increased this week from $580-595/mt CFR for Q195 3mm and higher to $600-615/mt CFR, for end-of-August and September shipments. Turkish buyers are yet to reveal any decent interest in these offers. However, the less competitive import offers have supported Turkish mills’ upward moves. There is hardly any supplier present in Turkey’s import segment other than China. Several sources reported ex-India indications at $620-625/mt CFR, which are not workable anyway. Russia continues to stay away from active HRC offers while focusing on the domestic HRS market and export sales of slabs and BPI.
In the UAE, while the majority of HRC import prices have maintained their current positions, ex-China offers have started to increase. However Emirati buyer are still hesitant to make booking as domestic demand have remained sluggish. According to sources, UAE offers from China have grown to $600-625/mt CFR for September shipments, up from $590-600/mt CFR earlier. Further to that, Saudi Arabia has received offers from ex-China at around $625-630/mt CFR, as opposed to booking 15,000 mt at $585-595/mt CFR in previous weeks. Meanwhile, ex-India offers have been silent over the last few weeks since there has been significantly less trading activity in the UAE. The same goes for South Korea's supplier, which has chosen to withhold its offers after Emirati customers showed not much interest in the previous week's offering.