Global View on HRC: July ends on bearish note, all attempts to improve prices failing

The moods in the global HRC market have remained rather bearish as attempts of some major mills from China to improve prices have fully failed and rare deals have been done only after discounts. Some price increases have been reported in the GCC but mainly because of the rising freight rates amid geopolitical tensions, and in Europe ahead of the holidays lull.

Some small increase in offers was announced by some Chinese HRC exporters early this week. But these attempts were not taken seriously by sources in the international market, as they still see reduced demand for Chinese materials. So, by the end of the week, prices have corrected back again and have been almost stable over the week. Major large Chinese mills have been offering SS400 HRC with thinness of 3 mm and above at $495-505/mt FOB, while Chinese tradable SS400 HRC price (from small mills and traders) price has settled at $484-490/mt FOB versus $485-487/mt FOB last week. Last week, deals for Chinese SS400 were reported at near $485/mt FOB, but there has been very limited activity for HRC exports recently. The export market was weaker in terms of demand, and some CRC from China were traded to the Latin American market, while plate trades were to Southeast Asia.

Prices for imported HRC in Vietnam have continued to move down this week, and buyers have even cut their targets to as low as $500/mt CFR. However, trading has been limited as major buyers and exporting mills have been waiting for new local prices expected to be announced by Hoa Phat in the next few days. The latest offers for Indonesian SS400/SAE1006 3 mm HRC have been reported at $510/mt CFR Vietnam for September shipment. However, this offer level is available mainly from traders and emerged after a rumored deal for Indian coils at $510-512/mt CFR. This means prices have gone down by $5/mt compared to the lowest offer level of $515/mt CFR seen last week. In addition, position cargoes held by traders in the Vietnamese local market have been available at $517/mt CIF for Vietnamese or Indian SS400 HRC.

The latest official offer prices from major Vietnamese and Indonesian mills have been at $500-505/mt FOB to different markets.

In Turkey, HRC producers have maintained their local prices at $580-600/mt ex-works, following rather decent sales to their regular large and medium-sized customers, mainly closed at $580-595/mt ex-works. However, despite the sales, the mills are not yet able to increase their offers due to still weak end-user demand and financial issues. On exports, the current offer levels are at $570-585/mt FOB, with most of the deals for HRC to the EU for Q4 customs clearance having been closed at $570-580/mt FOB for September shipments. In the import segment, the latest offers from China have been reported at $535/mt CFR, while Vietnam and Indonesia are at $545-555/mt and $550-555/mt CFR, respectively. No offers from Russia have been reported as the mills remain focused on domestic flat steel sales and are not planning to return to distant export markets within the upcoming month. Overall, according to sources, Turkey booked close to 300,000 mt of HRC from China, Vietnam and Malaysia during July, but mostly in the second half of the month.

In North Africa, not much change has been seen in terms of HRC pricing. Egypt remains at EGP 40,000/mt ($657/mt) ex-works, while on exports the mill prefers to negotiate depending on the customer. In fact, while workable prices in Turkey are too low according to the seller's evaluation, the Egyptian mill remains focused on the EU, with prices reported at €725/mt DDP, including a €30/mt CBAM fee, while some players reported $690-700/mt CFR levels from Egypt and down to $680-685/mt CFR in some offers. Algeria, being cut out of the EU HRC market, has been quiet on exports recently, with offers standing at around $590/mt FOB. Locally, the official HRC prices in Algeria are at DZD 110,000/mt ($695/mt) ex-works, but for large project customers the levels may fall to DZD 103,500-105,000/mt ($655-665/mt) ex-works, SteelOrbis has learned.

In Europe, business activity has come to an almost complete standstill this week as most market players are already on vacation and, moreover, the major deals for Q3 and Q4 have already been closed for HRC of several origins. In fact, Turkey, India and Vietnam have sold large amounts of HRC, with Turkey, according to market evaluations, having already exceeded the Q4 quota, with around 270,000-300,000 mt sold versus 160,573 mt allowed. In the local market, indications for the Italian market are at €700-715/mt ex-works, though not many are willing to sell now at the lower end of the range. In the northern region and Spain, deals have been reported at €710/mt ex-works, while workable offers are at €715-720/mt and up to €740/mt ex-works. In Central Europe, HRC prices have been reported at €740-750/mt delivered from the key suppliers.

Ex-India HRC trade activity has slowed down over the past week, after the previous sales at discounted levels, due to competitive challenges in Southeast Asia and logistical and shipping uncertainties. The SteelOrbis reference price for ex-India HRC stands at $480-575/mt FOB, where the higher end has remained stable over the past week, while the lower end has eased by $5/mt mainly because of weakening sentiments in Southeast Asia. According to at least two in trade circles, an eastern India-based mill has sold 20,000 mt for delivery to Vietnam at $480-483/mt FOB. This is compared to a sale by a different seller in the earlier week concluded at $485/mt FOB. A higher number of enquiries from Europe has been heard in India over the past two weeks, but most of these bids were in the range of $570-580/mt FOB lately, lower than offers at $580-590/mt FOB. No deals were confirmed during the past week after the previous contracts reported at $575/mt FOB.

In the GCC, import HRC activity has remained weak, as the seasonal slowdown and regional logistics concerns continue to discourage buyers from placing new orders. Although suppliers have made only limited adjustments to their FOB quotations, the sharp rise in freight costs has pushed CFR prices considerably higher compared to last week, prompting buyers to step back from the market until delivered costs return to more acceptable levels. Chinese SS400 HRC for September shipment has been heard at $490-500/mt FOB China, up from $480-490/mt FOB last week, with some suppliers quoting slightly above the upper end. Freight for 20,000-25,000 mt cargoes has increased from $50-60/mt to $70-80/mt, bringing Chinese material to around $560-580/mt CFR GCC. Indian HRC offers for September shipment have remained unchanged at $530-540/mt FOB, while freight has risen to $50-60/mt from $45-60/mt last week, resulting in delivered indications of approximately $580-600/mt CFR GCC. Buying interest remains limited at these levels, with market participants waiting for freight rates and regional shipping conditions to become more predictable.