Global View on HRC: Bearish mood still persists in some major markets, though China attempts slight rise

Though the leading benchmark HRC market - China - hit the bottom early this week and mills have announced new offers at slightly higher levels, the overall mood in the global HRC market has remained bearish. No improvement has been seen in India, another important market, and even some discounts have been offered to signs some deals. Though European HRC prices have been stable after the previous increase, in the Turkish market the gradual price decrease has continued.

Weak demand and heavy rains in China resulted in lower levels seen for Chinese HRC in the export market early this week. As a result, some deals for ex-China SS400 HRC were done at $485-487/mt FOB (a tiny decline from $487-490/mt FOB seen from small mills and traders late last week). But after a few days of futures price increases, and given the minimal to negative margins of the mills and more production curbs announced by producers, the lowest prices from China have rebounded to $492-494/mt FOB. Large mills’ HRC prices have been stable on average over the past week at slightly above $500/mt FOB. 

However, prices for import HRC in Vietnam have posted another week of declines, with at least two deals confirmed at lower levels. In particular, a contract for 30,000 mt of Indonesian HRC, not from the leading mill, has been signed at $517/mt CFR. Also, an undisclosed tonnage of Indian HRC could have changed hands at $520/mt CFR. This is down from offers at $525/mt CFR available in firm offers last week. Market sources have also seen bids at as low as $510/mt CFR this week, but this level has been assessed as too low for most sellers. Starting from Wednesday, some offers for Indian 2 mm HRC have increased to $530/mt CFR in Vietnam, and 3 mm material has been available for $525/mt CFR. But with weak demand seen in Vietnam and with oversupply still seen in Asia, most market sources do not expect increases in prices, at least for another week. week. 

In Turkey, HRC demand has been rather quiet with many domestic buyers being on hold and evaluating the market prospects. Local HRC prices are at $595-605/mt ex-works officially, while levels $5/mt lower are considered to be realistic. As for exports, some mills are quite aggressive, offering at $570-575/mt FOB or around $595-600/mt CFR to North Africa, but these are considered to be unworkable. In the import HRC market in Turkey, two Turkish re-rollers have booked 45,000-50,000 mt each. One deal was closed at 530/mt CFR LC at sight and the other one at $540/mt CFR including financing extras. Ex-Malaysia HRC for September shipments was on offer at $595/mt CFR early in the week with some bids reported $10/mt lower, with no deals heard just yet. 

In Europe, HRC market activity has been low locally amid the approaching holiday period, while higher domestic offers are still being gradually accepted. Across Europe, the levels of €700-710/mt ex-works have been accepted, while the realistic offers from mills are at €700-730/mt ex-works and up to €750/mt ex-works (in Spain). Import activity has been low overall, following the bookings last week from India, Vietnam and Turkey. Still, some have continued inquiring from Turkey for the fourth quarter, while the suppliers have dropped the offers down to $570-575/mt FOB at the lowest, which translates to around €565-575/mt CFR. HRC DDP-based offers from Asia have been set at €720-730/mt, SteelOrbis has learned.

Russia is still out of the market, despite the rumors of renewed export offers discussed earlier this week. Russian mills are still concentrated on domestic sales and increased prices for sheets at RUB 63,000-65,000/mt ($660-680/mt) CPT, while HRC is now priced locally at RUB 60,000/mt ($630/mt) CPT. Indicative HRC export offers from the Black Sea would be standing at around $500-515/mt FOB, while in the Baltic region offers would be at $490-500/mt FOB maximum.

The sluggish ex-India HRC trade has just about been kept alive over the past week by discounted sales to Southeast Asia and Europe, while buyers in the Middle East have moved to the sidelines, following some previous bookings and due to the risks of rising freight costs resulting from the flare-up of regional tensions. The SteelOrbis reference price for ex-India HRC has settled at $490-580/mt FOB, down $10/mt over the past week. There have been rumors that an eastern India-based mill concluded a deal for an undisclosed tonnage for deliver to Vietnam at around $490-495/mt FOB, translating to $520/mt CFR. Also, the price level of around $580/mt FOB or even slightly below is heard to have been fixed in two bookings to the EU. 

In the GCC, import HRC demand has remained weak, while unresolved logistics issues and still-high freight and insurance costs have continued to discourage buyers from committing to new cargoes. Chinese SS400 HRC offers for end-of-August and September shipments are now heard at $480-500/mt FOB, versus $490-500/mt FOB last week, corresponding to around $530-560/mt CFR GCC, with the decline limited to the lower end of the range. Indian HRC indications are assessed at $575-605/mt CFR GCC for end-of-August shipment, compared to $585-605/mt CFR last week, as $530-535/mt FOB has become more widely discussed for larger orders, although the previously mentioned 20,000 mt sale remains unconfirmed. Japanese HRC is meanwhile estimated at around $600-610/mt CFR, below the $620-630/mt CFR UAE levels seen before the regional shipping disruptions, but no fresh offers have been reported.

*- new offers from the middle of the week, while latest deals done at $485-487/mt FOB (down by $2-3/mt from a week before)