This week, SteelOrbis has been evaluating the overall HRC market situation and how the producers, traders and buyers from different regions have been trying to cope with the consequences of Russia’s invasion of Ukraine. Given the halting of steel production and logistical operations in Ukraine due to the war and the sanctions - current and imminent- on Russia, steel market players are trying to evaluate how to replace their previously booked ex-CIS cargoes and secure volumes for the future.
Turkey, as one of the major HRC buyers from the CIS, and lately having bought larger volumes from Ukraine, is the one market which has already started booking lots from Asia in large volumes. According to sources, since the end of last week close to 200,000 mt of flats were purchased by Turkey from China within $940-960/mt CFR for HRC specifically. The new offers are expected at $965/mt CFR for SS400 and over $1,000/mt for SAR 1006 HRC grade. In addition, 20,000 mt of ex-India HRC have been sold to Turkey at $990/mt CFR this week and the price is expected to be higher in the next round of bookings, given the local market situation. Turkish mills, which earlier were struggling to sell at $950-960/mt ex-works, have been announcing strong upward surges in their prices following the start of the war against Ukraine. The highest levels heard were at $1,200/mt ex-works and above, but by now the prices have settled at $1,150-1,160/mt ex-works, but sentiment is still upward. Coated steel prices have increased by $110-135/mt at least over the past week and are expected to rise further on the back of costlier feedstock. The latest indications for HDG, however, have been heard as high as $1,440-1,450/mt ex-works base, but the reality will be seen next week.
The EU is the next affected market. One factor is that Severstal, which supplied around 110,000-150,000 mt of HRC to Europe among other steel products, has officially announced that it has halted its sales to the EU due to sanctions. In addition, there may be a lack of HRC coming from Turkey, as the mills there are expected to increase shipments to their local market. In the meantime, local HRC prices in Europe were hiked by ArcelorMittal by €180/mt to €1,150/mt ex-works on March 1, particularly due to concerns in the energy sectors resulting from the war in Ukraine and the sanctions against Russia which is a major supplier of natural gas to several countries. Some buyers have already started to restock with HRC of alternative origins and deals for ex-India HRC were closed first at $1,050-1,060/mt CFR and then at $1,115/mt ex-works.
Overall, India has more interest in selling HRC to distant markets nowadays, given that the critical situation in the markets close to the Black Sea region has resulted in higher prices compared to Asia. While ex-India sales have been closed to Turkey and Europe, as SteelOrbis reported earlier, the Indian mills prefer to stay away from active negotiations with Asian buyers. The SteelOrbis reference price for ex-India HRC has surged to $920-1,030/mt FOB, versus $860-870/mt FOB last week. The price range is wide and it does not now include tradable levels to Asia or the Middle East, as no deals were done to these destinations.
Vietnamese HRC buyers have booked around 180,000-200,000 mt of HRC lately at $870-880/mt CFR, mainly from China, expecting further increase in prices. The latest offers have already increased by $20/mt from the tradable level reported early this week. Sources expect the supply in the region to be tight as India is not willing to sell much these days to te Asian region. Buyers may not be as concerned by consequences on the market of the war in Ukraine just yet, but they admit there are factors in favour of a steady price rise.
Starting from the end of last week, China has been the most active HRC exporter globally, having sold in total a huge volume since then and at competitive prices. In Asia, at least Vietnam and Pakistan made bookings, but deals have also been reported to Turkey and, most probably, to some other countries in the region. For most of the week, the official export offer level for SS400 HRC from China has been standing at $830-840/mt FOB, but today the price range is wider, as the levels differ greatly depending on the sales destination and its market situation. Currently, China’s position may be seen as advantageous as Chinese mills have enough allocation for export, even though they are still traditionally focused on domestic sales.
