This week, the attention of hot rolled coil (HRC) market players has been mainly concentrated on Asian destinations since many of them have been trying to evaluate the price trend and its possible impact. HRC prices in the region have mainly remained strong, particularly in the local markets of India and Vietnam, despite the price retreat seen in China following the confident uptrend early this week. In the meantime, the European flats market has been almost inactive this week ahead of the holiday season, while Turkey has followed China’s price trend this week and adjusted its offers in a downward direction.
China started the week with a $10/mt price increase for SS400 HRC to $580-590/mt FOB, while the tradable level for the same grade was estimated at the time at $565-575/mt FOB depending on the destination, up $10-15/mt since late July. However, by the end of the current week boron-added SS400 HRC export prices from China have retreated by $10/mt to $570-580/mt FOB, under pressure from the domestic market where demand has indicated a significant slowdown due to adverse weather conditions in Hebei Province. The tradable level for SS400 HRC has settled at $550-565/mt FOB by the end of the week, down $12.5/mt on average since August 1. In the SAE1006 HRC segment, export prices from China have followed the same trend. By the end of the week, offers have settled at $570-580/mt FOB, down $10/mt from the previous levels.
In the local market in Vietnam, Hoa Phat increased the prices for its SEA1006 and SS400 HRC for September and October shipments by $30/mt from the previous month to $599-600/mt CIF and such a move was considered to be in line with the market expectations. In the import segment, ex-China SAE1006 HRC offers first increased by $5-10/mt compared to end of last week, but later retreated by $10/mt to the most recent levels of $580-590/mt CFR. A 5,000 mt deal for the mentioned grade has been reported at $585/mt CFR. In the SS400 HRC segment, the most recent offers have been reported at $565/mt CFR, down from offers at $575-580/mt CFR seen early this week. As a result, the SS400 offer levels from China to Vietnam returned to the lower end of the general range observed last week. In addition, there have been deals for ex-China Q235 HRC at $558-560/mt CFR, among deals for other grades.
This week, Indian flats producers have increased their export offers by $5-15/mt to $585-620/mt FOB and this is considered to be quite wide for a workable range. The market trend in China was the main supportive factor for India earlier this week, but there has also been a certain trade revival in the domestic market in India along with the price uptrend. In particular, HRC trade prices have increased by $5-6/mt to $680/mt ex-Mumbai and to $666/mt ex-Chennai in the south. Moreover, there is a firm expectation that Indian mills will increase their local prices further in August by at least $12/mt (INR 1,000/mt) or by up to $36/mt (INR 3,000/mt).
In addition, Indian mills state there is no urgency in boosting export sales due to lower allocations for overseas markets and expected maintenance works. Accordingly, the producers may target some gains from nearby markets. Around 12,000 mt of HRC for September delivery has been sold to Singapore at $578/mt FOB, which is considered low according to local Indian prices and offers from China. Turkey and the MENA region have remained muted in terms of dealing for Indian material, while offers are at $620-630/mt CFR. In the EU, the holiday period is about to start, which will lead to diminished HRC import trade. In addition, there are some worries about the available quota for the last quarter of the year, which is also an obstacle for HRC imports.
In Turkey, HRC offers from China, which is the main player at present in the import segment, first increased from last week’s levels, but later softened a little. Nevertheless, offers have remained above $600/mt CFR which is not yet acceptable for buyers, but still provides support for Turkish domestic suppliers. However, domestic demand, though active, is still insufficient to support domestic price increases in Turkey. As a result, the producers who were earlier targeting $660-680/mt ex-works price levels for September deliveries have stepped back to $650-660/mt ex-works and the large buyers may be able to book at $640/mt ex-works levels, similar to the transactions in late July. In the import segment, as mentioned earlier, the market is dominated by China, which stands at $605-615/mt CFR with some discounts possible. India is at $630/mt CFR and there is no interest from buyers, while South Korea and Egypt are offering at $660-665/mt CFR. In fact, while current South Korean offers are clearly too high, there have been deals reported at $610/mt CFR around 10 days ago, but for specific grades.
The European HRC market has, as expected, shown a significant slowdown this week, due to the approaching holiday period. Most market players have reported there is almost zero trading activity, while prices have remained indicative and relatively stable. In the domestic market, mills in southern Europe consider €640-650/mt ex-works workable, while in the northern region the levels are at around €650-660/mt ex-works and slightly above. Many producers have been giving signals to the market of their intention to increase prices after the holidays, counting on the traditional business revival in September and October. The situation in the import market may be another supportive factor for the uptrend. There is an expectation in the market that the quota for the third quarter will be used up quite quickly given the amount of HRC to be shipped in July-August and in September to European destinations. Moreover, some of these cargoes are expected to be waiting for customs clearance up to October 1, which makes fresh bookings for HRC for delivery in October and later risky for European customers.
In the UAE, import HRC prices have remained relatively stable over the past week and customers, which had partially filled their stocks earlier, have generally refrained from fresh bookings. China is still the most active in terms of offers to the UAE with $600-625/mt CFR offers for SS400 grade and for September shipments. However, some customers from the other GCC countries, most probably from Oman, are reported to have booked medium-size lots at $595-600/mt CFR. In the meantime, India and South Korea are reported to be staying away from active offerings to the Gulf region.