The overall market situation for hot rolled coil (HRC) globally has changed only slightly over the past week since China has become less aggressive in the export markets and has even increased its prices. However, this happened only due to the rebound in futures prices in China, while demand in the region has remained at low levels. As a result, the upward Chinese trend is considered temporary by many market players and overall other Asian suppliers have remained under pressure from low sales inside their region and have remained focused on sales to distant markets.
Chinese traders and smaller mills, which had significantly dropped their offers at the beginning of last week, have decided to go higher this week, resulting in an increase in the tradable levels for ex-China HRC, but in most main regions the uncertainty over the future price trend has remained. Mills’ prices for SS400 HRC were almost the same as last week at $520-530/mt FOB, but the tradable level went up by $7.5/mt week on week to $490-520/mt FOB. Even higher levels have been heard early in the week but they have not been sustained. Market sources said that some buyers in Southeast Asia can accept $490/mt FOB from China. In distant markets, prices from China have already increased by at least $20/mt since last week. In particular, new offers for Chinese SAE1006 HRC to Turkey have been reported at $570-590/mt CFR, up by $20-30/mt from the previous deals reported last week. In the UAE, Chinese suppliers have been asking for SS400 HRC $560-570/mt CFR, up by $20-30/mt over the past week.
Prices for HRC in the Vietnamese market have also followed the rebound started by China. However, Vietnamese importers are mostly just evaluating the situation for now and plan to resume purchases when the trend becomes clear, as expected next week when local producer Formosa Ha Tinh Steel should announce its offers. Offers for ex-China SAE1006 HRC have been reported at $535-545/mt CFR, up from the lowest level of $520/mt CFR last week. In the meantime, offers for ex-Japan SAE1006 HRC have settled at $550-570/mt CFR, up by $10-20/mt CFR. Meanwhile, according to sources, suppliers from Taiwan will not sell at below $540/mt CFR.
In Pakistan, Chinese suppliers have decided to go higher this week, given better sentiment in the local and futures markets in China. However, other suppliers of SAE1006 HRC, like those from Japan, Taiwan and South Korea, have mainly been keeping their prices unchanged in the country. Specifically, after a few deals for ex-China SS400 HRC were signed in Pakistan at $510/mt CFR last week, down by $15/mt week on week, at the beginning of this week new deals have been reported at $525/mt CFR. Besides, later in the week Pakistani customers were reporting offers coming at $530/mt CFR and some even at $540/mt CFR. Meanwhile, offers for SAE1006 HRC from suppliers from Japan, Taiwan and South Korea have mainly been voiced at $550-560/mt CFR, the same as last week. Besides, according to market insiders, a deal for 20,000/mt ex-Japan HRC has been signed at $550/mt CFR, though this information has not been confirmed by the time of publication.
Indian HRC exporters have increased their discounting on offers but have still failed to conclude deals amid lower bids from Asia and the Gulf region with the competition with cheaper Chinese offers remaining tough in key markets. The Indian official offers submitted have remained at $550-570/mt FOB, but discounted prices by some mills have been reported at $520-530/mt FOB. As a result, the reference price level has been lowered by $30/mt on the lower end and by $10/mt on the higher end to $520-560/mt FOB. But this has failed to trigger much demand.
In the EU, domestic HRC business activity has remained scarce this week due to the still high level of stocks and the insufficient amount of orders in the market. The official domestic offers for HRC in the EU have been stable, but the low sentiment in the market and the pressure still coming from the import side have dragged down the tradable price levels. In Italy, this estimated level has decreased by €15/mt to €635-655/mt ex-works, although by the end of the week some sources reported that one of the mills has been ready to deal at €600/mt ex-works. In the northern region of the EU, HRC price levels have been set at €650-680/mt ex-works, though some sources report levels €20-30/mt lower as the available ones. Aggressive imports have remained an issue for European HRC mills in terms of competition since prices have moved down further by €20-30/mt over the past week to €600-630/mt CFR. The import segment is still dominated by Asian suppliers, which continue seeking sales to distant markets, while trade and price levels in their region remain dull. Particularly, the lowest prices in the EU have been offered by Japan and Taiwan at €600-610/mt CFR Italy and €10/mt higher to Spain. In fact, some traders report that Japan is already ready to sell at €590/mt CFR. Ex-Turkey price levels remain non-competitive at a minimum of €630/mt CFR since the suppliers cannot afford to compete with the aggressive ex-Asia offers neither in exports nor in their own market, due to high production costs.
In fact, this week Turkish HRC produces have had to give in to the market pressure and have decreased domestic and export prices to $620-650/mt ex-works/FOB, though some official offers are $10/mt higher than that. While in the domestic market some small and medium-sized lots have been traded, exports have been almost non-existent. As some market players say, in the EU “the levels that are heard as CFR are most probably the estimated negotiated price, but not the offer, since it is too high for the mills. But even this level [€630/mt CFR] is way too high for the EU buyers.” In this situation, Turkish mills have cut the production of HRC and the average estimated capacity utilization rate in November is estimated at around 65-70 percent at most. In the import segment, China has withdrawn its aggressive offers and most ex-Asia prices are at $585-590/mt CFR. As for Russia, one of the mills is reported to have booked around 20,000-25,000 mt of HRC to Turkey at $575/mt CFR, while another supplier, a sanctioned one, has closed a deal for small coils at $535-540/mt CFR, but later on increased the offer to $550/mt CFR.