The global hot rolled coil (HRC) market has continued to be affected by fluctuations in HRC futures prices in China, which resulted in new offers and deals at lower levels in Turkey, the Middle East and India this week. However, by the end of the week HRC futures prices have recovered in China, provoking more confusion in the market. Meanwhile, suppliers from Europe have continued to struggle with low demand, cutting their offers to attract buyers. Indian HRC suppliers, however, have remained among the few who are still positive, sustaining their offers at high levels especially given the strong demand in their local market.
This week has started with the decrease in local and futures HRC prices in China mainly caused by the increasing inventory levels of HRC in the domestic market given the contrast between high production and low demand for HRC in China. This in turn has weighed on HRC export quotations, with Chinese steel producers, including major ones, cutting their export offer prices for SS400 HRC. Export offers for boron-added SS400 HRC from large Chinese mills have settled at $555-570/mt FOB, with a midpoint at $562.5/mt FOB, down by $10/mt week on week and down by $7.5/mt since the end of last week. Meanwhile, the tradable level for ex-China SS400 HRC has been voiced at $535-550/mt FOB, versus $540-550/mt FOB, depending on the destination, with the lower end of the range corresponding to offers for Chinese materials in Vietnam at around $545/mt CFR, down by $5-10/mt week on week. Meanwhile, offers for ex-China HRC have been voiced in India at around $575-585/mt CFR, with numerous deals for at least 50,000 mt in total booked at the above levels over the past two weeks, according to sources. At the same time, by the end of the week, local prices for HRC have recovered slightly by RMB 35/mt ($5/mt) compared to September, reaching RMB 4,040-4,070/mt ($555-559/mt) ex-works on September 15.
In Vietnam, local steel producer Formosa Ha Tinh Steel (FHS) has announced local prices for HRC for November-December shipments, decreasing them by around $12-21/mt over the past month to $588-597/mt CIF, depending on the size of orders. This move was expected by local buyers given the pressure from cheap ex-China offers, coupled with still weak domestic demand in the country. However, import HRC trade has been mainly on pause as Vietnamese buyers are expecting more clarity over the price direction. The latest offers for ex-China SS440 and Q195 HRC have been voiced at $540-545/mt CFR, down by $5-10/mt week on week. Meanwhile, the reference price for import SAE1006 HRC has moved to $565-575/mt CFR, down by $5-10/mt over the past week.
Ex-India HRC prices have been stable at $590-620/mt FOB but large mills have been holding back offers and getting ready to increase them after raising local prices over the past week even as market conditions in key destinations have remained mixed. At the same time, according to sources, mills are looking at ex-India prices in the range of $620-650/mt FOB and it would “not be a big concern” if buyers were scarce considering very good local prices and tight supplies.
In Europe, the tradable price level for local HRC has been trending down, as transaction activities have remained scarce amid weak demand, while distributors have kept reducing their stocks anticipating a further drop in prices. Accordingly, the general range in the EU HRC market is currently at €620-650/mt ex-works, compared to €630-660/mt ex-works last week. More specifically, the tradable level estimated in southern Europe has moved to €620-630/mt ex-works, down by €10-20/mt week on week, while in northern Europe achievable levels have decreased to €630-650/mt ex-works for October and November deliveries. Import trade has been close to zero this week, despite some weakening in import HRC offers. In particular, import prices for HRC have dropped to €610-635/mt CFR, versus €620-650/mt CFR last week. Offers for ex-Taiwan HRC have been heard at €610/mt CFR, down by €20/mt week on week, while suppliers from India, South Korea and Japan have decreased their offers to around €620/mt CFR Spain, down by €10-20/mt week on week.
In Turkey, there has been some lively activity in the HRC import segment since some local customers have needed to restock. According to sources, at least 20,000 mt of ex-China HRC were booked at the end of last week at $570-575/mt CFR for Q195 grade. The latest offers are at $580-590/mt CFR for the same material, while S235JR grade is on offer at around $600/mt CFR. In addition, there has been talk about a deal from Japan for higher HRC grades at around $600/mt CFR, versus $605/mt CFR in the initial offer. Some sources estimate the deal was close to $580/mt CFR base. HRC import offers from South Korea have also been reported, at around $590/mt CFR with slight discounts considered possible. In the domestic market, the realistic offer levels have settled at $650-680/mt ex-works, although some buyers continue receiving $690-700/mt ex-works for October-November deliveries. As regards exports, Turkish mills have reported little activity, while prices for EU and non-EU destinations vary at $640-650/mt and $615-625/mt, both for October-November shipments and on FOB basis.
In the UAE, while end-user demand has remained a critical issue, Emirati purchasers have continued to replenish with Chinese materials. According to market sources, UAE purchasers have purchased various lots totaling roughly 20,000 mt of S235JR grade HRC at $580/mt CFR from China. At the moment, ex-China SS400 offers have remained stable at around $570-580/mt CFR. Meanwhile, a few Indian HRC offers to the UAE have been reported this week at around $620-640/mt CFR, though no bookings or market interest were observed. In contrast, several major mills from India and South Korea still do not supply to the UAE since domestic trade in their countries is more active.