The optimism which had appeared at the beginning of the week among Chinese HRC suppliers based on the recovery of futures and local HRC prices has changed with the unexpected weakening of ex-China HRC prices by the end of the week given the resistance from most buyers to higher offers. At the same time, while most HRC suppliers globally have chosen to keep their prices relatively stable, trade has remained modest in most regions, though Asian suppliers have reported improved interest in the Middle East, which has resulted in fresh deals. Furthermore, following weeks of price declines in Europe, this week has brought some changes to the European HRC market as many suppliers have started to claim that domestic HRC prices have already reached the bottom.
Chinese HRC mills have decided to increase their export offers this week by $12.5/mt week on week to $545-565/mt FOB given a recovery in futures prices this week together with improved domestic quotes. However, although at the beginning of the week, some traders have slightly increased their prices as well, in general the tradable price level has remained unchanged, and by the end of the week even discounts have been voiced by Chinese suppliers globally. In particular, by Friday, October 20, the tradable level for Chinese SS400 HRC has dropped to $515-525/mt FOB, versus $515-540/mt FOB at the beginning of this week. Offers for ex-China SS400 and Q195 HRC have been voiced in Vietnam at $525-530/mt CFR, the same as last week, while bids have been at $520/mt CFR. Offers in Turkey have been voiced at $555-560/mt CFR, down by $10/mt since the beginning of the week, while a deal for around 10,000 mt of ex-China SAE1006 HRC have been reported in the UAE at $573/mt CFR this week.
Ex-India prices have remained notionally at $590-620/mt FOB, the same as last week, while several mills have continued to report ongoing talks on long-term export contracts with buyers from Europe on fixed discounts, but no deals have been concluded so far. Notably, in terms of long-term export contracts, local mills are completely out of overseas markets, where a lot of discounted material is heard to be flowing in from China and where there is a very bearish mood across Asia and the Middle East.
In Vietnam, local steel producer Formosa Ha Tinh Steel (FHS) has announced its new HRC prices for domestic customers, having delayed its announcement for one week. The new offers have been revised downwards by $13-17/mt month on month to $575-580/mt CIF, as expected by most market insiders, given the still low prices for import HRC, for ex-China HRC in particular, while most customers have been pushing for lower bids given the slow demand in the country. As for import HRC prices, Chinese traders are still offering their materials at lower levels in Vietnam. In particular, after several lots for 20,000 mt in total for ex-China HRC were booked in Vietnam at $520/mt CFR and slightly below at the end of last week, at the beginning of this week around 10,000 mt in total have been booked at $525/mt CFR for December shipment, while most offers have been voiced at $525-530/mt CFR, though by the end of the week most bids have fallen to $520/mt CFR.
HRC prices have softened in Turkey over the past week due to negative market sentiment, the lack of demand and decreasing import scrap prices. In the domestic market, the price level is at $630-650/mt ex-works, although some suppliers are still trying to avoid going far below $650-660/mt ex-works. As regards exports, demand has been quite slow and the issue is that most customers, namely, those from North Africa and the EU, are asking for discounts to $555-565/mt FOB base, whereas Turkey is officially offering at $590-615/mt FOB levels. Still, some mills may consider selling at $570-580/mt FOB in the case of a sizeable order. In the import segment, China started the week with an increase to $570-575/mt CFR for December shipments of HRC, but later the offers rolled back to $555-565/mt CFR for 30,000-40,000 mt lots. Still, Turkey’s interest in purchases is minimal due to declining scrap prices. However, there is an expectation that some restocking should begin by early November, since China, which already offers the lowest price in the Turkish market, is not likely to decrease prices significantly due to high production costs. Aside from China, there are offers from South Korea at $590/mt CFR.
In the UAE, despite market insiders' persistent claims of weakness in the local market, trade activity has remained lively. Meanwhile, Chinese mills have been attempting to improve their offers in comparison to some market rumours that a few Chinese suppliers have continued to give significantly cheaper offers than the general market prices during the week. Even while offers, particularly from China, have remained ambiguous, no purchases at lower prices have been reported. As a result, China sold 10,000 mt of HRC to the GCC this week at $573/mt CFR. Ex-China offers have been at around $570-580/mt CFR for shipments to the UAE in November and December, while last week's offers were at $580-590/mt CFR. Nonetheless, as indicated, a few Chinese suppliers are still providing HRC at $555-560/mt CFR to the UAE. South Korean suppliers, on the other hand, have raised their prices by $10/mt to $590-600/mt CFR, and this week sold 10,000 mt of HRC to the UAE at $590/mt CFR for November-December shipment. Meanwhile, Japan has sold 25,000 mt of HRC to the UAE at $580-585/mt CFR. India, a frequent exporter to the GCC, has decided to focus on its local market as it remains stronger and has postponed giving offers to the GCC.
This week has brought some changes to the European HRC market as many suppliers have started to claim that domestic HRC prices have already reached the bottom given that most European mills are not accepting any requests for discounts, while producers in the north have even made attempts to raise their offers. Workable prices in the EU have settled at €600-620/mt ex-works, against €585-610/mt ex-works last week. More specifically, local producers in Italy have been refusing to go lower than €600/mt ex-works this week, while some offers have been heard even as high as €620/mt ex-works. Meanwhile, local HRC prices in northern Europe have been voiced at €610-620/mt ex-works. Import HRC offers in southern Europe have remained relatively stable over the past week, standing at €580-615/mt CFR, depending on the supplier. Offers from Vietnam are still voiced at €580-585/mt CFR Italy, while offers from other Asian suppliers have remained at €600-615/mt CFR.