The situation in the global hot rolled coil (HRC) market has started to change slightly this week amid the worse sentiments which have appeared in Asia following the fall in futures prices in China after weeks of a strong uptrend. Besides, since some Chinese traders have offered rather aggressive prices, buyers in Turkey have become more cautious regarding the future trend. At the same time, lower Chinese offers have managed to attract buyers from the UAE. Meanwhile, despite the turbulence in China, Indian HRC suppliers have remained rather optimistic, focusing on sales to Europe where local producers have kept their prices stable at high levels.
Sentiments among Chinese HRC suppliers have worsened this week following the sharp drops in futures prices and local prices in China. Export offers for boron-added SS400 HRC given by major Chinese mills are at $670-690/mt FOB, for end-of-May and June shipments, with a midpoint at $680/mt FOB, down by $5/mt week on week. At the same time, the tradable level for ex-China SS400 HRC has settled at $625-640/mt FOB, versus $655-675/mt FOB last week, as Chinese traders and smaller mills have started to cut their offers given the sharp falls in futures prices for HRC and ferrous products. Ex-China SS400 offers from traders in Vietnam have been reported at $635-645/mt CFR, compared to $660/mt CFR and above last week. Besides, after several deals for ex-China SS400 HRC were reported in Pakistan at $665/mt CFR at the beginning of this week, down by around $15-25/mt week on week, by the end of the week material has changed hands at $650-655/mt CFR. Besides, a deal for around 25,000 mt of ex-China material has been reported in Egypt at slightly above $690/mt CFR, according to sources. At the same time, domestic HRC prices in China are at RMB 4,410-4,430/mt ($641-644/mt) ex-warehouse on March 23, with the average price level RMB 65/mt ($9.5/mt) lower compared to that recorded on March 16, according to SteelOrbis’ data.
In Vietnam, HRC prices from Chinese suppliers and traders have decreased sharply, especially from those suppliers who are dealing within the scope of a non-VAT trading policy. At the same time, big Chinese mills have slightly lowered their offers as well, given worse sentiments in China amid the sharp drop of futures and local prices. In particular, offers for ex-China SAE1006 HRC have been voiced at $680-700/mt CFR, depending on the supplier, versus $690-710/mt CFR last week. At the same time, offers for ex-China SS400 HRC from most suppliers have settled at $650/mt CFR, down by $20/mt, while some offers from traders have been voiced at $635-645/mt CFR. Offers from other HRC suppliers have remained extremely rare and at the same time high as compared to Chinese offers. In particular, offers for SAE1006 HRC from South Korea and Taiwan have been heard at $750/mt CFR, the same as last week, while indicative offers for ex-India HRC have settled at $730-740/mt CFR Vietnam. Thus, the SteelOrbis reference price for import SAE1006 HRC has moved to $680-685/mt CFR, compared to $690-695/mt CFR last week, amid lower offers coming from China.
Turkey’s HRC market has remained slow this week in terms of business activity. Buyers have become even more cautious regarding the future trend, since some Chinese traders have offered rather aggressive prices in the import segment. By the end of the week, ex-China HRC offers for Q195 stand at 685-710/mt CFR and at around $715-720/mt CFR for SAE1006 grade. These offers are quite low especially compared to South Korea at $800/mt CFR and Egypt at $850/mt CFR. Ex-Russia offers are at $765-815/mt CFR this week depending on the seller. Import activity is minimal, but some buyers may prefer to deal for Chinese origin since the prices are very attractive. In the domestic market, mills’ offers have slid a little, but still remain high at $840-860/mt ex-works base for June deliveries. One of the reasons for mills being able to avoid large discounts is the limited supply situation, caused by the ongoing absence of Isdemir. However, Iskenderun-based MMK Metalurji is going to restart its 2.3 million mt HRC facility from April 1, aiming to increase the profitability of its coated steel sales, since captive production is much more advantageous in terms of cost compared to feedstock purchases.
Ex-India HRC prices have consolidated at higher levels as mills have not been willing to give discounts to a number of outlets where prices are lower than in Europe, the main sales destination for exporters recently. The SteelOrbis reference price for ex-India SA1006 2 mm HRC has increased to $740-770/mt FOB, down from $715-760/mt FOB last week. But most sellers are heard to have completed pulling back offers submitted earlier at below these levels, saying that they are targeting the same price they get in Europe in other markets. An eastern India-based mill reported a deal for 30,000 mt for delivery to Europe at $760-770/mt FOB and another deal of 20,000 mt for May to Italy at $750/mt FOB. A Maharashtra-based integrated mill has reported a trade for 20,000 mt at around $770/mt FOB to Rotterdam and another tonnage of 10,000 mt for Egypt at $755/mt FOB, sources said.
Sentiments have remained rather positive in the EU HRC market this week, with the range of domestic offer prices for mainly June delivery materials remaining unchanged in Italy and showing a slight increase in northern Europe, though the tradable level has been at the same level. More specifically, HRC offers prices in the EU for June deliveries have been voiced at €830-870/mt ex-works this week, with Italian mills still offering at €830-850/mt ex-works, the same as last week, while the tradable level has settled at €820/mt ex-works. Meanwhile, in northern Europe, domestic HRC prices have been heard at €860-870/mt ex-works for deliveries in June, up by €10/mt week on week, though the workable level has remained at around €850/mt ex-works. Business activity has been rather slow as well, with some deals reported mainly for short lead times. At the same time, import HRC prices have been fluctuating this week, with no clear trend observed in the market, as some suppliers have maintained their high offers, while other have decided to provide discounts in new deals. Asian suppliers, like those from Japan and South Korea, have kept their offers high at €790-800/mt CFR, and those from Vietnam have kept their offers at around €770/mt CFR, and some other exporters have decided to concede on price to sign new deals. Thus, several deals for ex-India HRC have been reported to southern and northern Europe at around $820-830/mt (€764-774/mt) CFR. while most ex-India offers have been reported at around $840/mt (or €783/mt) CFR. Furthermore, suppliers from Egypt have also managed to sell several lots of HRC to southern Europe at around $825-835/mt (or €769-778/mt) CFR this week, while offers for ex-Egypt materials were heard at $850/mt (€792/mt) CFR, compared to $850-860/mt CFR last week. ($1 = € 0.93)
In the UAE, despite the market's sluggish demand and the start of Ramadan, Emirati buyers acquired small lots to replenish stocks. As a consequence, ex-China 10,000-15,000 mt of HRC has been sold to the UAE for around $730/mt CFR for May shipping, while offers for SS400 grade HRC have remained stable at around $720-730/mt CFR. At the same time, according to market insiders, cheaper offers for ex-China materials with unverified silicon content have been heard in the UAE market as well. In particular, Chinese traders have been offering HRC Q235B 2.75 mm and above, HRC with unverified silicon content at $645/mt CFR and for HRC with maximum 0.03 percent silicon at $675/mt CFR, while a deal for around 5,000 mt has been reported at around $655/mt CFR for May shipment. According to sources, such low ex-China offers have been heard in the market due to the quality of the coils and mainly were offered by traders who are practicing non-VAT trade. In the meantime, Indian offers continue to remain stable at $750/mt CFR for May shipment, as compared to the previous week. However, according to market participants, India does not want to provide more offers because of stronger trade activity in other markets. Also, South Korea has maintained its previous HRC offers to the UAE for May and June shipments at $800/mt CFR.