Global hot-rolled coil (HRC) prices have continued to decrease in all the key markets and the size of the provided discounts has been rather large this week. In Asia, the increased number of offers from China and prices becoming more and more competitive triggered price drops in Vietnam and from India. In addition, weaker markets in the EU and Turkey, which had been higher-priced for a while, have also affected Asian suppliers’ positions. Russia’s offers, which are at least $50/mt lower than prices for materials of non-toxic origins, have not been affecting the overall market trends recently. Not many buyers are ready to deal with Russia in the falling market and, moreover, they also have good chances to soon receive lower offers from alternative suppliers and at much smaller risk.
In Europe, domestic HRC prices have remained under pressure as most buyers have been unwilling to restock. Over the past week, workable prices across the EU have decreased by €30-70/mt to €1,120-1,200/mt ex-works. As usual, the lower level is more common in the Italian market. Imports have remained competitive in the EU, putting additional pressure on local mills’ offers. Asia-based buyers have mainly been offering at €960-980/mt CFR, down €10-20/mt over the past week. Moreover, additional discounts seem to be applicable and the general market expectation is downward in Europe. Some sources believe that, despite some expected restocking particularly in Italy, prices may continue going down in the EU. The key reason is the persistent weakness in the automotive sector, coupled with some exhaustion of credit lines of buyers, owing to the record-high prices seen in the market. Still, the costs of production are to remain high and might even increase further, which could eventually lead to lower capacity utilization rates in some periods, sources said.
Turkish HRC prices, which have been inflated for the past several weeks, have started to fall drastically, decreasing mills’ margins, but also bringing the market offers closer to realistic levels. The latest official price levels for HRC in the domestic market in Turkey stood at $1,000/mt ex-works, down $150/mt since before the holiday. However, by the end of this week several suppliers admitted $950/mt ex-works may also be considered for some serious orders. As regards exports, the reportedly discussed levels are even lower - market sources inform $900-950/mt FOB is possible to get during negotiations, while some even hear $870-880/mt FOB as being achievable from mills. Along with falling HRC prices, Turkey has witnessed a drastic fall in coated and cold-rolled coil prices, down $150-190/mt since before the holiday. More discounts are awaited in the coated and CRC segments due to very low domestic demand, high stocks and recently announced definitive measures in the EU against imports from Turkey, which will significantly limit overseas sales.
Export offers for boron-added SS400 HRC given by major Chinese mills have dropped by $25/mt this week to $780-820/mt FOB for July shipment due to lower HRC futures prices, impacted by the continuing Covid-19 restriction measures, though offer prices of $740/mt FOB and even lower have even been heard from smaller mills and traders. Chinese HRC has been among the most competitive in the global market, though for now deals are rare, mainly because customers are waiting for prices to reach some bottom first. The tradable level for ex-China SS400 HRC has been heard at $730-780/mt FOB, with the midpoint at $755/mt FOB, down by $50-60/mt over the past two weeks, depending on the destination. Local prices in China have lost RMB 85/mt ($13/mt) this week.
Falling ex-China HRC prices have contributed to the rapid decline in the import HRC market in Vietnam, where the reference price has slipped to $800-820/mt CFR, down by $50/mt over the week, as at this level there have been offers from China. There has been a lack of competitors for China in Vietnam as fresh offer from India has been reported at $850/mt CFR and ex-Russia coils that could be offered at $700/mt FOB Russia’s Far East region, but they have been out of the range of buyers’ interest due to sanctions and expectations of a further downtrend in the market. Local customers have been waiting for the new local HRC prices to finalize at what level they may buy import materials.
Other Asian HRC suppliers have also been cutting prices in the region, but have failed to attract demand so far. For instance, in Pakistan, suppliers from Taiwan have decreased their offers for SAE1006 HRC to $890/mt CFR, down by $60/mt over the past two weeks, while the most recent offers from South Korea have been heard at $885/mt CFR. Ex-China SAE1006 HRC offers are at around $830/mt CFR Pakistan.
Ex-India HRC prices have come to $800-920/mt FOB, with the midpoint at $860/mt FOB, falling by $65/mt on average since last week. The highest end of the range has been lowered by $30/mt and it reflects the level for the European market, which, however, has remained inactive as buyers have been waiting for mills’ prices at $850/mt FOB and below. The lower end of the range ($800/mt FOB), which dropped by $100/mt over the past week indicates the newly emerged offers to Vietnam, at $850/mt CFR, which, however, is still too high for customers enjoying lower offers from China. To the Middle East, the UAE and Saudi Arabia, ex-India HRC prices are at $900-920/mt CFR, so at around $840-850/mt FOB. Indian mills have been cutting local HRC prices due to weak demand and their inventories are gradually increasing, which may lead to further export price declines next week.
