Global View on HRC: Buyers’ pessimism in most regions still affect producers’ prices

Friday, 29 July 2022 17:42:09 (GMT+3)   |   Istanbul
       

Business activity has failed to recover in most regions globally, with most countries still seeing low demand for hot rolled coils (HRC) and a pessimistic mood. In Turkey, extremely low domestic demand for finished products and slow exports, coupled with aggressive sales policy of the Russians, have been behind the decreases in prices. Indian HRC exporters were forced to decrease their prices as well in response to the continued weakening of market conditions in Asia and the Middle East regions. In the EU, where mills have been trying to raise offers, the still limited trading activities along with drops in import prices have affected the mood and domestic prices have remained mainly unchanged. In Asia, despite a recovery in domestic and futures HRC prices in China, trade has remained muted as most importers have still been counting on discounts.

In Turkey, HRC prices have substantially decreased over the past week since the mills turned out to be unable to keep their offers at $700/mt ex-works. The low demand and pessimistic moods outweighed the factor of expected lower supply in August, and so Turkish producers were offering $660-680/mt ex-works this week. Buyers, on the other hand, expect $640-650/mt ex-works levels to be seen shortly, also given slow sales and falling prices for coated and cold rolled steel. Re-rollers were reporting that demand for their products is extremely low, making them push for more aggressive prices for feedstock materials. Export sales from Turkey, particularly to the EU, have been quite slow as buyers are about to leave for the summer vacation period. As a result, Turkey’s HRC FOB prices are now estimated at $620-650/mt FOB depending on the destination. Another factor is the aggressive sales policy of Russian mills seen over the past two weeks. After having sold at $620-630/mt CFR, Russia-based HRC suppliers traded additional volumes at $590-600/mt CFR Turkey. Overall, up to 100,000 mt were booked by Turkish buyers.

Aside from Turkey, Russia has also been trying to find buyers in Asia. The long negotiations with India resulted in a sale of 30,000 mt of HRC at around $610/mt CFR with estimated freight of around $100/mt if shipped from the ports of Novorossiysk or St. Petersburg. Russia’s offers to Vietnam were reported at $600/mt CFR this week, with no luck in finding a customer due to buyers’ resistance to restock Russian origin HRC.

Indian HRC exporters have been forced to drop prices further over the past week as the workable price definitively fell below the $600/mt FOB mark in response to the continued weakening of market conditions across Asia and the Middle East region along with the fall in demand for export tax-exempted alloy HRC. Deals have been rare as competition is still tough and buyers in some markets have been waiting for further declines. Indian SAE1006 HRC prices have come to $560-590/mt FOB with the midpoint at $575/mt FOB, down by $22.5/mt on average from last week. Though there have still been some offers from mills at $595-610/mt FOB (to European or some Asian buyers), the tradable level is already lower, according to sources. And traders think that mills could cut prices by a further slight margin.

In Europe, despite improved sentiment, the range of domestic offer prices has remained mainly unchanged, with only a slight increase seen in southern Europe. Achievable HRC spot prices are at €780-900/mt ex-works, with the lower levels recorded in Italy and the higher levels in northern Europe. More specifically, Italian mills have been offering at €780-800/mt ex-works, while higher offers at €880-900/mt ex-works have been voiced in northern Europe, the same as last week. According to sources, a further increase is rather doubtful considering that the difference between local and import quotes has widened due to lower import offers. At the same time, restocking is lower than expected and, considering that the summer holidays are approaching, there is a chance for price stabilization. Meanwhile, business activity in the import segment has remained muted, though most offers have been reported at lower levels. In particular, offers to southern Europe have settled at €700-730/mt CFR, down by €10-30/mt over the past week, depending on the origin. The lower end of the range corresponds to ex-India offers for boron-added coils at €700/mt CFR, compared to €710-730/mt CFR last week. Offers from Japanese suppliers have been mainly voiced at €715-730/mt CFR southern Europe, down by €10-20/mt week on week, though, according to sources, some Japanese suppliers have been ready to sell at as low as €680-690/mt CFR.

In China, despite a recovery in domestic and futures HRC prices, most Chinese HRC exporters rolled over their prices this week, with only a few producers, who offered at the highest level among all suppliers last week, going lower to attract customers. Thus, export offers for boron-added SS400 HRC given by major Chinese mills are at $590-610/mt FOB for August shipment, with a midpoint at $600/mt FOB, which has decreased by $2.5/mt week on week. At the same time, higher futures prices have provided some support for local HRC prices, which, therefore, has also changed sentiment among Chinese traders. The tradable level for ex-China SS400 HRC has been heard at $560-600/mt CFR, depending on the destination, up by $10/mt on the lower end of the range week on week. However, most importers have continued to push for lower bids. In particular, Chinese traders who offered SS400 HRC at $580-590/mt CFR Vietnam last week, have increased their offers to $590-600/mt CFR this week. However, Vietnamese customers’ bids have still been voiced at $570-575/mt CFR. Ex-China SS400 HRC offers have been reported at around $625-635/mt CFR Pakistan, up by $10-15/mt over the past week. During the given week, HRC prices in the Chinese domestic market have seen certain rises amid improved transaction activities. Domestic HRC prices in China are at RMB 3,890-3,980/mt ($577-591/mt) ex-warehouse on July 29, with the average price level RMB 125/mt ($18.5/mt) higher as compared to July 22, according to SteelOrbis’ data.

In Vietnam, most customers have continued to show very limited interest in HRC imports over the past week considering the negative expectations, lower finished steel consumption, the high levels of stocks, and attractive local HRC prices. In particular, the prices available for ex-China position SAE1006 HRC have been voiced at $610-620/mt CFR, the same as last week. Meanwhile, offers for ex-India boron-added HRC through traders have settled at $590-600/mt CFR Vietnam, down by $10-20/mt week on week, though indicative HRC offers from Indian mills have been reported at $610-630/mt CFR, compared to $630/mt CFR last week. As a result, the SteelOrbis’ reference price for imported SAE1006 HRC has moved to $590-610/mt CFR, compared to $600-615/mt CFR last week, considering that lower ex-India offers have appeared in the market, while most Chinese suppliers have continued to roll over their prices.


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