Global View on HRC: CIS mills mainly close November, prices up in Turkey

Friday, 15 October 2021 18:13:07 (GMT+3)   |   Istanbul

- The November export allocation of hot rolled coils (HRC) from the CIS is not limited as most mills have managed to conclude sales since the past week to various destinations. European buyers were there to restock, although they managed to insist on lower import prices due to problematic end-user demand and sufficient stocks. Moreover, the general ex-CIS export price level improved over the month in the Black Sea region, given the positive sentiment in the Turkish market.

- Russia’s Severstal finished its November production sales this week having traded a total of around 130,000 mt for rolling in the given month. The majority of the volume was sold to Europe, but the FOB prices have mainly declined, especially to the southern part of the EU, under pressure from high freight rates. NLMK, according to sources, has traditionally traded its November allocation of around 30,000 mt to Turkey. MMK, the third and for now largest HRC exporter, chose to continue focusing on Asia with up to 160,000 mt sold so far to Vietnam and is expected to give only limited allocation to the Turkish market except for giving the regular 30,000-40,000 mt to its subsidiary. Ukraine’s Metinvest is almost sold out for November production, with the most recent sale of 10,000 mt closed to Turkey. Earlier, a similar volume was sold to the Middle East and around 50,000 mt were traded to Thailand around two weeks ago. As a result, it seems that only MMK has decent November production volumes to export for now as the mill’s regular allocation is around 250,000 mt per month. Other Black Sea-based suppliers may also allocate limited tonnages in order to sell at higher prices amid the positive mood, but the volumes are not expected to be large.

- Turkey-based HRC producers have raised their prices in two steps by $60-70/mt to $920-930/mt ex-works for the local market. The main reason is of course the surge in import scrap prices seen in the most recent deals and the expectation that the trend will continue. In addition, there has been some restocking activity in the local market for all kinds of flats as warehouses turned out to be low on material when prices from the mills started to improve. In the import segment, the CIS mils have traded around 40,000 mt in total this week at $865-870/mt CFR, while in the previous round for October production the lowest sales level was at $830/mt CFR from Ukraine.

- In the HRC market in the EU, local transaction prices have once again weakened, being a result of low demand from both traders and the end-user side. The stocks in the market are quite full with domestic and import origin material and a business recovery may be seen in November, when restocking activity will be back on the table. In imports, some deals were seen to Italy for both HRC and coated steel, Spain is also said to be asking for material. However, the quota volume does not allow many imports up to the end of the year, while the euro rate and high freights are said to be “killing business”, specifically from Turkey.

- Ex-China HRC offer prices have moved sideways and most sellers have been watching the situation in the local market, where negative sentiments have emerged due to the expected easing of production curbs, which will push up HRC supply. Premier Li Keqiang said that the government will raise the energy supply capacity and a "one-size-fits-all" program for lowering production of energy-intensive enterprises, including steel mills, will have to be stopped now. Domestic HRC prices in China are at RMB 5,800/mt ($901/mt) ex-warehouse on average on October 15, down by RMB 70/mt ($11/mt) since last Friday, according to SteelOrbis’ information.

- Vietnamese HRC importers have resumed active purchases of import HRC this week after receiving low prices for ex-Russia material. It has been confirmed that in total 160,000 mt of ex-Russia HRC have been traded to Vietnam at $843-850/mt CFR this week in four to five lots. The price is slightly below $850/mt CFR seen in the previous round of purchases in September for the same origin. Though prices have decreased a bit, this has been a positive sign for the market as the tradable volumes have been large. 

- Local producer Formosa Ha Ting has rolled over its prices for HRC for December shipment, while Hoa Phat has announced a decline of $6-8/mt from the previous month, reflecting the still not very promising situation in the market.

- At the same time, Indian HRC suppliers have been more bullish, seeing better demand and prices locally. Indian integrated mills were seen to be offering at $860-870/mt FOB, $20-30/mt above the level seen in early October. This price has been assessed as too high for Asian customers, but one of the mills has managed to sell 10,000 mt of HRC at $900-905/mt CFR to the Gulf region, translating to $860/mt FOB. 

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