Global View on HRC: No common trend as EU mills attempt rise, China rather stable and prices fall in SE Asia

There has been no common trend in the global HRC market over the past week. Moreover, prices have been moving in opposite directions in different outlets: EU mills have attempted prices increases and in general there some demand has been seen in the EU for import material, while HRC prices in Southeast Asia have continued to fall rapidly with the main focus of buyers on local purchases. China, which usually is the main driver of pricing in Asia, has been rather stable, with even a minimal increase in offers not being sustained.

The EU’s country-specific quotas (CSQs) announced last week continue to impact HRC trade in the region. While some mills have decided to urgently restock with origins that are considered relatively safe, local HRC suppliers have been trying to raise prices from €680-695/mt ex-works in earlier deals to €700-720/mt ex-works and even to €730/mt ex-works. By the end of the week, the market has heard the unofficial price announcement of ArcelorMittal at €770/mt ex-works, as expected, but which for now is evaluated as a market statement rather than a realistic price level. In the import segment, a large volume for the third quarter quota period is reported to have been booked from India at $650-660/mt CFR, while an Italian mill, according to sources, has booked 70,000 mt of HRC from Vietnam for the fourth quarter at $735/mt CFR. In addition, Turkey has managed to sell at least 30,000 mt for the fourth quarter at around €575-580/mt CFR.

Turkish HRC prices have decreased this week both locally and for export, amid lower scrap prices, subdued demand and the consequences of the EU’s CSQ announcement. Locally, mills have decreased their prices by around $5-10/mt to $600-610/mt ex-works, while some say that at least $5/mt discounts are possible for large lots. As regards exports, official offers are at $590-600/mt FOB, but, according to sources, a large lot has recently been sold to Europe at $580/mt FOB. Moreover, sources are quite confident that prices will dip even lower than that. Import offers from China have stabilized at around $535/mt CFR on average, with possible workable prices being at $520-525/mt CFR maximum. Offers from Vietnam have been reported at $570-575/mt CFR, while ex-South Korea material has been on offer at $630/mt CFR.

In North Africa, no significant change has been seen this week with domestic HRC prices being stable in both Algeria and Egypt, at DZD 110,000/mt ($695/mt) and EGP 40,000/mt ($707/mt) ex-works, respectively. Export offers from the region have been vague, while ex-Algeria indications have been reported at $600-620/mt FOB, based on the situation with the EU. The Egyptian seller is reported to be more bullish, most probably aiming to fill its EU quota. European sources have reported HRC offered from Egypt to the EU at as high as $700/mt CFR.

Large Chinese mills were offering boron-added SS400 HRC mainly at $505-510/mt FOB at the beginning of this week, a rise by $6/mt since late last week, but by the end of the week they have rolled back offers to $500-507/mt FOB. This increase was very shaky as generally demand has been weak and has even worsened further in the local market. But since the tenth round of local coke price increases in China has been under discussion and iron ore with Fe 62 percent content is standing at $100/mt CFR, this has been putting pressure on mills’ margins and has supported steel prices from the cost side. Also, going forward, under expectations of narrowing profit margins and increased environmental protection measures, hot metal output is still expected to follow a downward trend. The price level for small mills and traders has not changed much, at $487-490/mt FOB, which is $0.5/mt higher on average from what was seen in the market late last week. 

Major Vietnamese mill Formosa Ha Tinh Steel (FHS) has announced its new HRC prices for August-September delivery, with the price drop of $41/mt (to $538-548/mt CIF) increasing compared to the decrease of $22/mt announced a month earlier. This is even lower than $549-550/mt CIF voiced by Hoa Phat last week, signaling about further worsening the market moods. 

Import HRC prices in the Vietnamese market have continued to fall this week, but trading has been limited as buyers have also cut their bids. A number of customers prefer local sourcing in small volumes and with closer lead times, resulting in increased trading of domestic material. The SteelOrbis reference price for import SS400/SAE1006 HRC in Vietnam has settled at $520-530/mt CFR, falling by $14/mt on average over the past week, where the lower end represents buyers’ highest price idea and the higher end represents the latest offers. Traders have been eager to sell ex-India and ex-Indonesia 3mm HRC at $523-525/mt CFR. 

Import HRC prices in Pakistan have dropped over the past few weeks, following the trend seen in China and generally in Asia. China is still dominating the Pakistani market, but for now prices seem to have reached the bottom. The latest deals for Chinese Q195 HRC have been done at $512-513/mt CFR Pakistan, slightly down from offers at $515/mt CFR last week and previous active bookings at $525/mt CFR Pakistan in mid-June. As for ex-China SAE1006 HRC, there have been deals for 5,000-7,000 mt in total at $530-539/mt CFR Pakistan, down from the previous round done at $540-545/mt CFR. But after the deal's price level touched $530/mt CFR, the downtrend has paused. 

Prices of ex-Japan SAE1006 HRC for the Asian region have been at $545-555/mt CFR, which is a big drop of $35-55/mt from the levels seen in the first week of June. However, this price drop is mainly due to the trading environment in Asia and to tough competition rather than being due to the situation in Japan. These low levels are available only to some limited customers since automotive demand in Japan has been rather decent and allocation for exports has been reduced due to some maintenance works. 

Ex-India hot rolled coil prices have remained under pressure from domestic oversupply during the past week and buyers are reassessing the emerging trends. But even as a few mills have attempted to nudge up offer levels in Europe, generally suppliers have had to slightly correct prices down again to stay competitive in other outlets, in Asia, in particular. The SteelOrbis reference price for ex-India HRC has settled at $500-590/mt FOB with the midpoint at $545/mt FOB, down by $5/mt from last week. At least one deal was done to the UAE at $530-535/mt FOB. Two bookings for August shipment have been heard at $580-590/mt FOB for the European market and $500/mt FOB is the Indian mills’ level for Vietnam. 

In the GCC, import HRC activity has remained selective this week, with Chinese offers still setting the lower end of the market and Indian suppliers showing more flexibility to secure sales. Demand is still seasonally slow, while buyers, especially in the UAE, remain cautious due to expectations of further price softness and elevated freight and insurance costs linked to the Strait of Hormuz situation. Chinese SS400 HRC offers for August and September shipments are still heard at around $490-500/mt FOB China, corresponding to about $540-560/mt CFR GCC. Indian HRC offers are mostly at $540-545/mt FOB for August shipment, corresponding to around $585-605/mt CFR GCC, though lower workable levels are still being discussed for serious buyers. Earlier rumors of Indian sales at $490-520/mt FOB were dismissed by sources as unrealistically low, while a 20,000 mt HRC booking from India to the Middle East was heard this week at around $530-535/mt FOB, showing that business is still possible below official offer levels.