Prices for hot rolled coils (HRC) in the major markets have continued to decrease this week, triggered by yet another drop in China. While demand has not improved much in Asia, most major global HRC suppliers have been counting on a sales expansion to higher-priced destinations. Thus, the import trade has remained rather active in the Middle East, with several lots reported to have sold from Asia. European buyers have kept booking limited volumes on a constant declines of import quotes, while local HRC prices have continued to drop in the EU. Suppliers from India have decreased their offers as well given falling bids from all main customers globally. Turkish HRC mills have also failed to avoid price declines, though their business activity has been limited due to tight competition with Asian suppliers.
Chinese HRC exporters have once again become one of the most significant factors exerting pressure on global prices. Export offers for boron-added SS400 HRC given by major Chinese mills have settled at $585-615/mt FOB, with a midpoint at 600/mt FOB, down by $15/mt compared to offers at the beginning of last week and down by $7.5/mt since the end of last week. According to sources, although not all big Chinese mills have come up with new HRC offers so far after the holiday, some have already been offering at lower levels, while those like Shagang Steel Group have sustained their offers at $615/mt FOB, while offers from smaller mills have been voiced at around $555-560/mt FOB, the same as last week. At the same time, the tradable prices for ex-China SS400 HRC have settled at $530-560/mt FOB, down by $10-15/mt week on week. Domestic HRC prices in China have settled at RMB 3,900-4,160/mt ($564-602/mt) ex-warehouse on May 4, with the average price level RMB 20/mt ($3/mt) lower compared to Friday, April 28, according to SteelOrbis’ data.
After the holiday, Vietnam’s HRC import segment has faced another drop in ex-China prices. In particular, among the lowest offers for import HRC are ex-China SS400 position cargoes at $540-550/mt CFR, down by $20/mt week on week, while customers’ bids have already been reported at $535/mt CFR. Meanwhile, ex-China SAE1006 HRC has been extremely rare in Vietnam with the indicative prices standing at $610-625/mt CFR, the same as last week. Thus, the SteelOrbis’ reference prices for SAE1006 HRC stand at $610/mt CFR based on only ex-China HRC offers as other suppliers like those from India, Japan and Taiwan have been staying out of the Vietnamese market given their focus on higher-priced destinations like Europe and the Middle East. At the same time, on May 5, the second-largest HRC producer in Vietnam, Hoa Phat Group, has announced its new local HRC prices for June and July shipments, cutting them by over $70/mt from the previous month to $611-612/mt CIF.
Ex-India HRC prices have been corrected downward this week as lower offers have been going down in all major destinations with the declines in the European market gathering momentum, and in general bids from all customers have been falling. The SteelOrbis reference price for ex-India SAE1006 2 mm HRC has settled at $645-690/mt FOB by the end of the week, with the midpoint at $667.5/mt FOB, down by $22.5/mt over the past week. The lower end of the range reflects offers to the Middle East, while the higher end of the range has lost $30/mt, given the lower offers to Europe. In particular, ex-India prices have come to $740-745/mt CFR in Europe, down from the previous deal at $760/mt CFR and offers at $760-780/mt CFR. However, prices as low as $710-720/mt CFR are awaited from sellers if they want to accelerate sales in Europe, where the competition between Asian suppliers has been very tough.
Most European HRC producers have been rather inactive this week, holding back from giving new offers amid full order books and the inability to compete with foreign HRC suppliers. Workable prices in the EU HRC market have settled at €800-830/mt ex-works, against €830-840/mt ex-works reported last week. More specifically, the tradable price levels in Italy have been estimated at €800-810/mt ex-works, down by €20/mt week on week, although most mills have been avoiding giving new offers, and their price level is estimated at around €830/mt ex-works, the same as last week. Meanwhile, prices at €820-830/mt ex-works have been reported to be workable in northern Europe, down by €10/mt over the past week, while mills’ price ideas have been heard at around €830-840/mt ex-works for mainly August and even September deliveries. In the meantime, import HRC prices in southern Europe have dropped to €660-700/mt CFR, down by €15/mt CFR over the past week. The most competitive offers have been reported from Vietnam, Indonesia and Taiwan at €660/mt CFR, compared to €670-688/mt CFR last week. Besides, according to market insiders, a deal for 30,000 mt of ex-Egypt HRC has been reported at $730/mt CFR southern Europe this week. Import HRC offers in northern Europe have also been declining this week, coming to €680-700/mt CFR Antwerp, down by €20/mt week on week, with a deal for ex-Japan HRC reported to have been signed at €690/mt CFR.
In Turkey, HRC producers have failed to avoid further price decreases this week. While offering for June production, which is considered a rather tight lead time now and which exerts pressure to conclude sales, the suppliers have continued to face extremely low demand. Domestic buyers are quiet before the elections, while export sales have remained challenging due to the competition with Asia in the European market. HRC export offers from Turkey have dipped to $710-730/mt FOB, down by around $20/mt over the past week. Some traders have reported $680-690/mt FOB levels are also achievable for large lots, but these levels are still hardly workable in the EU compared to ex-Asia indications. Locally, Turkish mills have also dropped prices by $20/mt to $720-740/mt ex-works base and another $10/mt reduction is quite possible. China has once again become one of the most significant factors to exert pressure on Turkey’s prices. Having returned from their holiday, Chinese sellers have dropped their Q195 offers by $15-30/mt to $580-595/mt CFR for June shipments, making it almost impossible for alternative suppliers to compete with them for Turkish buyers.
In the UAE, even though local end-user demand has remained inadequate, Emirati buyers have purchased some lots to replenish their supplies. As a result, ex-Japan HRC was sold to the UAE at $685-690/mt CFR, while the previous week’s offers were at $690/mt CFR. China, on the other hand, has sold 10,000 mt of HRC to Oman at $660 CFR. Nevertheless, HRC offers to the UAE for ex-China SS400 material have stayed the same at $600-630/mt CFR compared to last week. In contrast, Indian mills, seeing the competitive Chinese offers, have chosen to reduce offers to $675-680/mt CFR for June-July shipping. Similarly, South Korean HRC offers to the UAE have fallen to $670-680/mt CFR for shipment in July or late August, down from $715/mt CFR in the previous week.