Despite some mixed sentiments mounting in China amid HRC futures price fluctuations, Chinese suppliers have kept aggressively dropping their hot rolled coil (HRC) prices in new deals and offers, putting the global HRC market under continuous negative pressure. In particular, while suppliers from China have managed to sell sizable volumes at lower levels to Turkey, exporters from India have decreased their HRC prices in new deals to the Middle East. In Europe, the most aggressive import HRC offers have kept coming from Asia, widening the gap with local quotes to above €150/mt.
This week started with a price drop in China, with both mills and traders going lower. Thus, considering Chinese exporters’ readiness to provide significant discounts, trade activity has improved slightly not only in the traditional markets but also in higher-priced destinations, like Turkey. At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $560-585/mt FOB for mainly July shipments, with a midpoint at $572.5/mt FOB, down by $12.5/mt week on week. At the same time, the tradable level for ex-China SS400 has been assessed at around $530-550/mt FOB, down by $20-30/mt week on week. According to sources, Chinese suppliers have managed to sell around 40,000-50,000 mt of Q195 HRC mainly at $580/mt CFR for June and early July shipments in Turkey, but some lots were sold at close to $575/mt CFR. Offers for ex-China SS400 HRC in Vietnam have decreased by $10-15/mt over the past week to $550-555/mt CFR, with several deals reported to have been signed at $540-550/mt CFR this week. Domestic HRC prices in China have settled at RMB 3,840-4,050/mt ($546-576/mt) ex-warehouse on May 17, with the average price level RMB 15/mt ($2.3/mt) lower compared to May 10, according to SteelOrbis’ data.
Indian HRC exporters have decided to go lower again, achieving modest success in reviving buying in some markets like the Middle East. Ex-India HRC prices have been reported in the range of $590-650/mt FOB, with the midpoint at $620/mt FOB, down by $17.5/mt week on week and $7.5/mt lower compared to the offers at the end of last week. According to sources, several deals for around 25,000-30,000 mt in total for ex-India HRC are reported to have been signed in the UAE at $630/mt CFR, down by $10/mt week on week, which corresponds to around $595-597/mt FOB. Besides, another trade for 15,000 mt for delivery to Oman has been reported at $592/mt FOB or around $635-640/mt CFR. Ex-India HRC offers in Turkey have been voiced at $625-630/mt CFR, failing to compete with cheaper ex-China offers. At the same time, offers to Europe have remained relatively stable at $650/mt FOB, or $700-710/mt CFR, with no fresh deals reported so far, as although demand in the EU has remained on the positive side, buyers prefer to wait for further declines given the more aggressive offers from other Asian suppliers, especially those from Southeast Asia.
In Vietnam, prices of imported HRC have shown a rapid fall this week. Besides, given the pressure from cheap ex-China offers, coupled with still weak domestic demand in the country, Vietnamese steel producer Formosa Ha Tinh Steel announced new local HRC prices for July shipment, reducing them by more than $60/mt as compared to the previous offers announced back in April. Accordingly, the prices for ex-China position SAE1006 HRC have been voiced at $590-600/mt CFR Vietnam, versus $610-615/mt CFR last week, with a deal for around 5,000-10,000 mt reported to have been done at $590/mt CFR. Besides, according to sources, Vietnamese customers’ bids have already been heard at $580/mt CFR levels. Meanwhile, offers for ex-China SS400 HRC have been reported at $550-555/mt CFR, down by $10-15/mt week on week, with a few deals reported to have been signed at $540-550/mt CFR this week. Other foreign suppliers have continued to maintain their offers at high levels for Vietnam given their focus on other destinations. Offers for SAE1006 HRC from India and Taiwan have been heard at around $640/mt CFR, while indicative prices for ex-Japan HRC have been voiced at $650/mt CFR. Thus, the SteelOrbis reference price for import SAE1006 HRC has dropped to $590-595/mt CFR, from $610-615/mt CFR at the beginning of last week, given the aggressive offers coming from China.
HRC producers in Turkey have been forced to drop their local prices this week amid the pressure coming from low demand and competitive imports. In fact, only China is offering rather aggressive price levels, while other Asian suppliers, although having partially decreased their offers, are offering at much higher levels which are not acceptable. In the meantime, Chinese sellers, according to sources, traded at least 40,000-50,000 mt of HRC in total last week, mainly at $580/mt CFR, but some lots were sold at close to $575/mt CFR. All cargoes were for June and early July shipments. At the same time, India has been offering at $625-630/mt CFR this week, while South Korea has been offering at $650/mt CFR. Russian mills have preferred to stay away from the Turkish market for now, not being able to compete with China, but also as they have an opportunity to sell good volumes to the domestic and nearby CIS markets. In this context, Turkish HRC producers have decreased their local prices in a few separate steps by around $17.5/mt on average to $700-710/mt ex-works in the majority of offers, but most buyers assume that $690/mt ex-works and even slightly below is workable. As regards exports, the general price idea is at $690-700/mt FOB, but most traders report $675-680/mt FOB should be available, but these levels are still not workable, at least in the EU.
In the UAE, the urge to import HRC remains, mainly because offers have continuously moved down and so some lots were bought this week, even though end-user demand in the UAE continues to be weak. According to reports, Indian mills have sold 12,000 mt of HRC to the UAE at $630/mt CFR for June shipment. Furthermore, another Indian mill sold 15,000 mt of HRC for June shipment to Oman at around $635-640/mt CFR. While ex-Indian HRC offers have declined by $10/mt to $630/mt CFR, Chinese suppliers have decided to be more aggressive in their offers for SS400 and their prices have moved down dramatically by $60/mt to $570/mt CFR for July shipping. Similarly, ex-Japan offers have declined to $620-630/mt CFR from $630/mt CFR before.
Market sentiment in Europe has remained strongly negative, with cheaper HRC import offers invading the market. Workable HRC prices in Europe have been estimated at €750-780/mt ex-works, versus €750-800/mt ex-works last week. The tradable price level in Italy has been estimated at €750/mt ex-works, the same as last week, while prices at €770-780/mt ex-works have been reported to be workable in northern Europe. At the same time, most mills both in Italy and northern Europe have been avoiding giving any new offers, expecting to return to the market next month with HRC offers for September deliveries amid better market conditions. Meanwhile, import HRC prices in Europe have continued to show declines this week, falling to €590-660/mt CFR southern Europe, versus €645-685/mt CFR last week, with Asian suppliers remaining the most aggressive. More specifically, HRC offers from Southeast Asia have been reported at around €590/mt CFR, down by €50/mt over the past week, while offers for ex-Japan HRC have been heard at €660-670/mt CFR Spain, down by €5-15/mt week on week, with a deal reported to have been signed at €660/mt CFR for August shipment this week. Offers for ex-India HRC have remained at €645-655/mt CFR, the same as last week.