Most major global importing hot-rolled coil (HRC) destinations have continued to see falling workable levels of prices. The key reason is the overall subdued domestic demand in Turkey and Asian countries along with the aggressive offers from China and the generally negative expectations. Europe remains the only exception for now since domestic prices there have not dropped and some sources share the optimistic mood regarding exports to the US. Still, HRC imports in Europe have been challenging, specifically for Turkish sellers.
- The local HRC prices in Turkey have decreased to $890-915/mt ex-works, under pressure from low domestic trade and the aggressive offers still coming from China at around $835-845/mt CFR. Although a lot of market players have doubts that Turkish buyers are actively dealing for Chinese origin products, these offers are still weighing on the general market mood and have been affecting on the HRC pricing ex-CIS. In addition, the almost complete absence of Turkey’s exports to Europe is another factor putting pressure on prices. As a result, mills have been forced to find some alternative sales destinations, and specifically some lots have been traded to Egypt at $880/mt FOB, while the general workable export price range from Turkey currently stands at $870-890/mt FOB. Another negative factor is the limited coated steel sales in the local and export markets of Turkey. Since re-rollers have been forced to provide discounts, they are naturally expected to be more cautious in terms of HRC restocking.
- In the European markets, HRC prices have remained relatively stable and the workable level generally for the EU is estimated at €870-1,030/mt ex-works. Still the number of transactions has remained limited but European mills are not eager to decrease their prices due to high costs, expected restocking on the buyers’ side, and the flats exports foreseen to the US in the coming months.
- The CIS-based HRC exporters are currently out of the market as they have sold out their December production volumes and find it a bit early to actively offer for January. The latest deals were closed from Ukraine to Turkey for small coil at around $825-830/mt FOB. Some Russian mills are expected to announce prices close to $835-845/mt FOB Black Sea for January production but the workable levels might be lower, taking into account the pessimistic mood in the market.
- Chinese HRC exporters have remained aggressive this week, seeing further weakness in their local market and trying to push volumes overseas. Export offers for boron-added SS400 HRC given by major Chinese mills are at $800-820/mt FOB for January shipment, down by $40/mt from last week, but the tradable price level for SS400 coils, including the level from traders, has fallen to $770-780/mt FOB. The trading has been slow as most customers have been postponing negotiations, waiting for prices to reach the bottom.
- As a result, import HRC prices in Vietnam have fallen in two rounds by $25/mt in total by the end of the week. On Monday, a deal for ex-China SAE1006 HRC for January shipment was disclosed at $830-840/mt CFR done late last week, down from a contract signed by a large mill for the same shipment period at $850/mt CFR earlier.
But by the end of the week, the tradable price level has fallen further to $790-840/mt CFR with $790/mt CFR and $820/mt CFR fixed in deals. Lower offers from China and reduced demand have been among the main reasons for the continuation of the downtrend in Vietnam.
- Declining import prices have put pressure on Vietnamese local HRC prices. The second largest HRC producer in Vietnam, Hoa Phat, announced its new local HRC prices for January shipment, cutting them by over $50/mt from the previous month to $835-840/mt CFR. The drop was bigger than the $40/mt decrease announced by Formosa Ha Tinh last week.
- Indian HRC exporters have not been competitive in Asia, so they have focused on their local market or small-volume deals to the Gulf. Indian mills have declined to adjust prices much, on the back of sufficient domestic demand and the cost push. The reference price for ex-India HRC has slipped to $800-850/mt FOB, down by $15/mt on average from $830-850/mt FOB in the previous week. But the lower end of the range corresponds to the nominal price, which is close to the tradable level in Southeast Asia.