Global HRC producers which have been testing the market with higher prices for hot rolled coils (HRC) during the past weeks given their high production costs, have been failing to attract buyers. Thus, although most European mills have been officially offering their HRC at the same level as last week, the tradable price level has dropped in the EU market, on the back of slack demand and competitive imports. Meanwhile, the situation in Turkey was very similar, with producers being squeezed between increased costs of production and lower buyers’ bids. At the same time, Indian and Chinese mills have not been ready to give up, pushing their offers higher, and in case of India, even further preparing for price increases.
However, most buyers, especially in Asia, are skeptical about sellers’ optimism, bidding at lower levels.
In Europe, although most mills have been officially offering their hot rolled coils (HRC) at the same level as last week, the tradable price level has dropped in the EU market, on the back of slack demand and competitive imports. In particular, official HRC prices from mills have remained unchanged over the past week, standing at €780-850/mt ex-works, however, workable prices have been reported at €760-765/mt ex-works in Italy, while a tradable level for HRC in northern Europe is estimated at €750-770/mt ex-works, with some transactions for small volumes reported within that range in Germany. In the meantime, the interest of European buyers in import offers, especially in southern Europe, has increased this week, with import offers falling to €700-730/mt CFR from €720-740/mt CFR last week. According to sources, following a deal for ex-South Korea HRC signed at €700/mt CFR Italy at the end of last week, the material has changed hands at around €720/mt CFR Italy this week. Besides, a deal for 6,000/mt of ex-Taiwan HRC has been reported at $620/mt FOB, while translated to around €700/mt CFR or slightly below. Apart from deals with Asian suppliers, market insiders have reported about a batch for 9,000/mt sold by an Egyptian producer at €730/mt CFR Spain this week.
Turkish HRC market has seen a rather dull week taking into account the low domestic demand and slow export sales. Being under pressure of weak business activity and lower scrap, Turkish mills have chosen to provide discounts for HRC by $20/mt to $660-690/mt ex-works. The suppliers are aiming to avoid the larger discounts for now as they are limited by the increased production costs, but the buyers are pushing for lower prices. By the end of the week, some sources reported $650/mt ex-works levels are also achievable, but for large tonnages only. Export offers are mainly at $670-700/mt FOB, which is not much competitive in the EU market if the AD tax is taken into account. The import HRC segment in Turkey has been relatively quiet this week. Russians have sold in total around 40,000-45,000 mt since early September at $600-640/mt CFR for October production and have decided to withdraw their offers for now. India has been in the market at $650-665/mt CFR while there have been talks about the earlier closed deals at $610-620/mt CFR.
Pessimistic moods also prevail in the CRC and galvanized steel segments of Turkey. Local CRC failed to settle at $800/mt ex-works and above and rolled back to $770-790/mt ex-works. HDG offers are at $780-850/mt ex-works, $20/mt down from the lower end over the week. In the meantime Turkey’s domestic PPGI prices are still at $930-960/mt ex-works, same as last week.
Indian HRC exporters have successfully pushed sales in some major sales destinations in the Middle East and were preparing for price increases in most major markets, seizing newer opportunities from rising energy costs in most Western markets. Ex-India HRC prices have been reported in the range of $570-610/mt FOB, where the lower end corresponds to the previous deals, while the higher end is the new levels targeted by the mills. Last week, the ex-India reference price was $570-585/mt FOB. Two western India-based mills have reported an aggregate deal for 20,000 mt to Turkey at $610/mt CFR, while one of the mills was also reported to be negotiating additional sales to the same destination at $630/mt CFR. These prices translate to around $580/mt FOB or slightly below, but the contracts were signed at least a week ago, with new targets at least $650/mt CFR.
But the success of Indian HRC suppliers with higher prices is very unclear. Even though some Indian domestic mills announced a partial rollback of reductions in HRC base prices announced earlier this month, demand in the local market in India has not been supportive for price rebound, at least so far. The partial rollback of earlier price reductions was led by ArcelorMittal Nippon Steel Limited (AMNS), which increased HRC base prices by a marginal INR 500/mt ($6/mt), taking the new September price to INR 56,500/mt ($710/mt) ex-works.
In China, HRC export prices have edged up slightly over the past week amid signs of a rebounding trend in the local and futures markets given stock replenishment ahead of the holiday. In particular, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $585-610/mt FOB for end-of-October and November shipments, with a midpoint at $597.5/mt FOB, up by $2.5/mt week on week. Meanwhile, Chinese traders have decided to go higher as well, pushing the tradable level for ex-China SS400 HRC to around $575-585/mt FOB, up by $10-20/mt week on week. However, according to market insiders, by the end of the week, some traders have started to drop their offers again to around $550/mt FOB due to weaker sentiments in the domestic market. As a result, several deals for ex-China SS400 HRC in short positions have been reported at $575/mt CFR, and at $580/mt CFR to Pakistan. Besides, another deal for ex-China coils has been heard in South Korea at around $620/mt CFR this week. Domestic HRC prices in China are at RMB 3,900-4,010/mt ($556-572/mt) ex-warehouse on September 16, with the average price level RMB 25/mt ($3.5/mt) lower as compared to September 9, according to SteelOrbis’ data.
Prices for HRC in the Vietnamese market have increased this week, with most import SAE1006 HRC offers standing at $610/mt CFR, compared to $590-600/mt CFR last week. However, Vietnamese importers have been mostly refraining from new deals, expecting local producer Formosa Ha Tinh Steel to announce its new offers. As a result, on September 15, Vietnamese steel producer Formosa Ha Tinh (FHS) announced that local prices for HRC for November deliveries will be stable compared to last month at $610/mt CFR for SAE1006 HRC (non-skin passed). Thus, only few deals for ex-China SS400 HRC have been reportedly done at $575/mt CFR by the end of this week.