The mood and price trends for hot rolled coil (HRC) in most regions globally have been demonstrating a certain optimism this week. Indian suppliers, who had been refraining from export sales for a long time, have returned to the market after the announcement of the export tax cancelation, increasing their offers by around $15/mt to $585-590/mt CFR Turkey. Meanwhile, Asian HRC suppliers have continued to maintain their offers at high levels in all main destinations globally, while the sentiments became more positive in China as well given the increase in futures prices as the Chinese government has announced stimulus measures. Besides, some cautious optimism has been seen in the European market. The only aggressive offers have been heard from Russian HRC suppliers this week, but the market generally does not consider Russia’s prices as a benchmark anymore.
The Indian government scrapped export duties on pig iron, specified iron and steel products and pellets, on November 18, which significantly improved sentiments among Indian HRC exporters, who had been restricted by 15 percent export duty for the previous six months. Most local sources agree that the lifting of export duties in India is a positive move and it was awaited by the industry, but most sources believe that the main support is currently from an improvement in sentiment, rather than from a real immediate possibility of exports increasing.
India’s local HRC trade prices have remained stable as negative sentiment on the pricing outlook based on rising import competition has outweighed any positives from the scrapping of the export tax, while demand has remained slow. Indian HRC trade prices have remained unchanged at INR 55,750-56,000/mt ($683-686/mt) ex-warehouse, including 18 percent GST.
Late this week, ex-India HRC prices in almost all sales destinations have been at higher levels, as suppliers have been seeing sentiment improvements in a number of markets such as Europe and the pricing policy of the Chinese has been less aggressive. The SteelOrbis reference price for ex-India HRC has settled at $535-550/mt FOB, with the midpoint at $542.5/mt FOB, up by $18.5/mt from the level seen early this week and up by $10/mt from last week. The lower end of the range corresponds to indicative price levels to Asia, while the higher end represents offers to Europe, while the prices in between are the current offers to Turkey.
In the flats market in Turkey, domestic HRC offers have stabilized at $620-640/mt ex-works base and demand has remained insufficient. Still, local mills are expected to take a breather amid increasing scrap prices, the cautiously positive sentiment in Europe, and less aggressive import offers. Asian suppliers seem to have withdrawn low prices and are now mainly settled at $570-590/mt CFR depending on the origin. Russia is still aggressive at $540-580/mt CFR depending on the supplier, but the market generally does not consider Russia’s prices as a benchmark anymore. However, in the slabs market Russia continues to dominate in Turkey, mainly due to aggressive offers and acceptable freight rate. As a result, while Russia is ready to deal at $440-480/mt CFR and even below, the $530-550/mt CFR offers from the alternative markets are not acceptable for Turkish buyers.
Russian HRC suppliers remain present in the HRC export market, though the actual trade is rather challenging for those under sanctions. One of the mills is targeting sales to the MENA region, targeting around $540/mt CFR to Turkey, and $560-570/mt CFR to Egypt and the GCC region. Sales to Asia are off the table for now for Russia due to costly logistics and low prices. In Russia’s domestic market, the general price level for hot rolled sheet is at $770/mt (RUB 56,000/mt) CPT, while domestic business activity has been fading due to seasonal factors and sanctions-related impacts on consuming industries.
In Europe, market sources have started to mention that the bottom may have finally been reached in the HRC market as after numerous bookings at low levels were done over the past week, while rumors about higher prices from domestic mills for January delivery HRC have emerged in the market. In particular, workable prices in the EU HRC market have settled at €590-650/mt ex-works, against €630-670/mt ex-works at the beginning of last week. According to sources, after Italian mills sold a lot of HRC in recent days and as they have filled their order books, they are asking for some increases, at €650/mt ex-works, while some are talking even about €700/mt ex-works for January delivered coils, which sounds quite impossible at least for now. Meanwhile, import HRC offers in southern Europe have started to rebound, after weeks of declines, reaching €600-630/mt CFR, up by €10-30/mt week on week, depending on the origin. In particular, according to market insiders, most Asian suppliers, like those from Japan, Taiwan, South Korea and Vietnam have withdrawn their aggressive offers at €560-590/mt CFR, and are currently offering at not below €600/mt CFR levels.
In China, HRC export prices have posted some increases over the past week, but increases have been small as limited demand in the global market and weak support from the local market, where prices have been fluctuating within a limited range, have prevented export offers from China from recording further significant hikes. Export offers for boron-added SS400 HRC given by major Chinese mills have edged up to $535-545/mt FOB for January shipment, with the midpoint mainly at $540/mt FOB, up by $2.5/mt from a week ago. However, by the end the week, sentiments have become more positive given the increase in futures prices as the Chinese government has announced new stimulus measures. As a result, the tradable level for SS400 HRC has settled at $525-540/mt FOB, depending on the destination, compared to $525-530/mt FOB at the beginning of this week. Domestic HRC prices in China are at RMB 3,790-3,920/mt ($529-547/mt) ex-warehouse on November 25, with the average price level higher by RMB 10/mt ($1.4/mt) as compared to November 18, according to SteelOrbis’ data.
In Vietnam, the situation has remained broadly stable in the HRC import market in the past week, with only some price corrections seen for ex-China materials, while other foreign suppliers have kept their offers stable at high levels. Accordingly, the prices available for ex-China SS400 HRC have been voiced at $535-540/mt CFR, compared to $530/mt CFR at the beginning of last week, and $545/mt CFR at the end of last week. Meanwhile, offers for ex-China SAE1006 HRC have settled at $550-560/mt CFR, the same as last week. At the same time, offers for ex-Japan SAE1006 HRC have been reported at $560/mt CFR, the same as last week, while suppliers from Taiwan have been offering their materials at $560-570/mt CFR, up by $10/mt on the higher end of the range week on week. The reference price for import SAE1006 HRC in Vietnam has come to $550-560/mt CFR, compared to $550/mt CFR last week, as most foreign suppliers, except those from China, are refusing to go below $560/mt CFR.