Following weeks of trending down, the hot-rolled coil (HRC) global market has started to see some cautious signs of optimism, at least in some regions. Some positive movements in China have supported the levels of offers in Asia, though a lot of market players believe it is too soon to evaluate the market as being a strongly rebounding one. A similar situation is seen in Turkey, where the mills finally avoided sharp price drops, following sizeable HRC and coated steel sales seen in the past week. In Europe, however, the local and import prices continued declining, under pressure from low demand, partly due to seasonal reasons. However, the local prices in the EU fell more significantly compared to import prices. Russian mills have received more demand for their HRC from Turkey and Asia despite the sanctions and high risks, but they are still forced to sell below the market levels.
Turkish HRC prices have somewhat stabilized, following some export sales closed since last week, and certain activity seen domestically. In addition, local re-rollers were quite actively selling coated steel last week to local and export markets, after providing good discounts. This week, they are trying to pull offers upwards, being sold out for June and partly for July. As a result, local prices for HRC in Turkey have settled at $820-840/mt ex-works, while the latest export deals have been reported at $805-820/mt FOB to various destinations. In the import segment, India’s indicative level is at $800/mt CFR, while there were no solid offers from China. In this situation, Russia-based suppliers have had the chance to sell HRC to Turkey, but at lower levels than the general market levels. According to sources, up to 70,000 mt was sold by one of the Russian suppliers, mostly at $700/mt FOB, which equals around $740/mt CFR. Now the supplier is trying to increase the price to $780-800/mt CFR. The other two Russian suppliers have been trying to reach $750/mt CFR, versus around $720/mt CFR in buyers’ price ideas.
As for Russia, the mills there have been trying to sell their HRC not only to Turkey but to other destinations. Being cut out of the European and American markets, they have been looking for buyers in North Africa, Vietnam, Pakistan, and China, according to market sources. In particular, an offer of $745/mt CFR was heard in Vietnam. Some of the mills, like NLMK, have been offering increased allocations for export, most probably pulled out from the local market, where consumption has decreased. In the meantime, Severstal was planning to cut production by 50,000 mt in May and might consider further declines in June. The domestic hot-rolled sheet price in Russia dropped by around $100/mt (RUB 10,500/mt) over just two weeks to $885/mt (RUN 65,500/mt) CPT including around $50/mt (RUB 3,000/mt) in delivery costs. Local demand has been poor as consumption has been sharply falling due to the sanctions and buyers, who have high stocks, are waiting for the mills’ offers to go down further. Knowing that export sales are troublesome for Russian producers, local buyers may be right in their evaluations.
In the EU, domestic prices have continued declining, under pressure from low demand on the end-user side, and since local traders and service centers are not so interested in heavily restocking, thinking that mills’ offers might decline further. This week, the workable HRC prices in the local market in the EU are assessed at €920-950/mt ex-works in the southern region and at €970-1,000/mt ex-works, in the northern region. Overall, local HRC prices have decreased by €30-60/mt since the end of May. Some sources believe €900/mt ex-works should be the bottom, while some expect levels €50/mt lower to be achievable. The demand outlook is not bright for the coming months, especially given the nearing summer holiday period in the EU. In the import segment, the general offer levels are at €830-870/mt CFR (€10-20/mt down) where the lower end is for deals from Turkey mainly to Italy, and the higher end is for some ex-Asia and ex-Egypt offers.
Vietnam’s HRC import prices have rebounded slightly this week amid the recovery in domestic and futures prices in China. In particular, Chinese traders, who offered SS400 HRC at $730-740/mt CFR last week, have increased their offers to $745-750/mt CFR. Meanwhile, Vietnamese buyers have reported offers for ex-China SEA1006 HRC at $760-775/mt CFR, compared to $755-760/mt CFR last week. No deals have been heard so far as most bids are still heard at $740/mt CFR for SS400 HRC and at $750/mt CFR for SAE1006 coils. However, Vietnamese importers are mostly just evaluating the market situation for now and plan to resume purchases when the trend becomes clear. At the same time, market insiders have reported ex-Russia HRC offers coming to Vietnam at $745/mt CFR for August shipment. Furthermore, there was talk in the market about a deal for 30,000 mt of ex-India HRC signed at $745-750/mt CFR, but this information was not confirmed by the time of publication. The SteelOrbis’ reference for import SAE1006 has moved to $760-770/mt CFR, up by $5-10/mt week on week, considering the recent offers coming from China.
Ex-China HRC prices have posted a slight increase this week after months of declines, amid the recovery of local spot and futures prices on the back of the easing of the pandemic situation in Shanghai and the improved market outlook following the recent announcement of stimulus measures. In particular, export offers for boron-added SS400 HRC given by major Chinese mills are at $750-770/mt FOB for August shipment, posting a $7.5/mt increase on average compared to last week. Meanwhile, the tradable price level has settled at $730-760/mt FOB, up by $10/mt week on week. In particular, this week, ex-China SS400 HRC offers have been heard at $745-750/mt CFR Vietnam, up by $15-20/mt over the past week. Besides, while Vietnamese buyers are refraining from new purchases, buyers in Pakistan have accepted higher ex-China offers, signing several deals for SS400 HRC at $780/mt CFR, up by $10/mt week on week. Domestic HRC prices in China are at RMB 4,870-4,970/mt ($731-746/mt) ex-warehouse on June 3, with the average price level RMB 45/mt ($7/mt) higher as compared to May 27, according to SteelOrbis’ data.
Indian HRC exporters are still cautious with negligible volume trades reported over the past week, as overseas sales opportunities are squeezed by the imposition of the 15 percent export tax. But sellers are trying to remain their presence, especially in markets in the Gulf and Europe. There was information in the market that a western India-based mill concluded a modest trade for 4,000 mt with a Gulf-based buyer at $770-780/mt FOB. Moreover, by the end of the week, more reports about cheaper ex-India alloy HRC have started to emerge as the duty is applied only on non-alloy steel. As a result, the tradable level for ex-India HRC has been reduced to $740-800/mt FOB, down by $40/mt over the past week.
