Despite Chinese government’s latest attempt to stimulate growth, Chinese suppliers have kept dropping their hot rolled coil (HRC) offers, putting the global HRC market and especially Asia under continuous negative pressure with local HRC prices dropping in Vietnam. However, Turkish producers are feeling less pressure at least for now, owing to the previously concluded export sales mainly to Europe and North Africa. Meanwhile, European HRC mills have kept holding back from offers given the summer lull and minimum business activity in southern European market amid traditional summer stoppages.
Following a drop in ex-China HRC quotations last week, this week has brought another fall in offers despite news about China’s central bank unexpected cut in key policy rates to boost a sputtering economic recovery. In particular, export offers for boron-added SS400 HRC given by major Chinese mills have come to $560-580/mt FOB, with a midpoint at $570/mt FOB, down by $5/mt over the past week. In addition, traders have continued to offer cheaper HRC position cargoes to the export market at much lower prices, though trade has remained limited amid generally slow demand globally. Thus, the tradable level for ex-China SS400 HRC has been heard at $535-555/mt FOB, down by $5-10/mt week on week, with the lower end of the range corresponding to deal prices in Vietnam at $543-545/mt CFR, down by $5-10/mt over the past week. Domestic HRC prices in China are at RMB 4,020-4,030/mt ($551-553/mt) ex-warehouse on August 17, with the average price level RMB 35/mt ($4.8/mt) lower compared to August 10, according to SteelOrbis’ data.
In Vietnam, local producers Formosa Ha Tinh Steel, has revised it offers downwards for domestic customers following the initial price announcement back on Monday, given still negative mood in import HRC market in the country. More specifically, by the end of the week, Formosa Ha Tinh has decided to revise its offers, declining them by around $13-21/mt CFR to $609/mt CIF for both SAE1006 and SS400 skin-passed and non-skin passed HRC.
Meanwhile, import offers for ex-China SS400 HRC have settled at $545-548/mt CFR, same as at the beginning of this week and down by $8-10/mt week on week, with several deals reportedly done at $545/mt CFR, according to sources. The SteelOrbis reference price for import SAE1006 HRC in Vietnam has settled at $568-575/mt CFR, versus $580/mt CFR at the beginning of this week, based mainly on the most competitive Chinese offers while other suppliers have been staying out of the market with indicative offers at $600/mt CFR and above from Japan and Taiwan.
Most Indian HRC exporters have kept holding back their offers amid mounting pessimism prevailing in most destinations, with China’s slump, coupled with limited export allocations for the current quarter and slightly improved local sales enabling mills to resist sudden export price adjustments. Ex-India HRC prices have remained at $585-620/mt FOB, the same as last week. Sources said that, even though sentiments across Asia and the Gulf have taken a hit from the slide in prices in China and buyers have been unwilling to accept higher prices, Indian sellers have been in no mood to cut prices to drive sales, leading to moribund export market conditions.
Turkish HRC market has still not seen plenty of domestic demand, however, the producers are feeling less pressure at least for now, owing to the previously concluded export sales. As SteelOrbis reported, in the first half of August Turkey sold from 100,000 mt to 150,000 mt of HRC for export, mainly to Europe and North Africa, mainly within $610-625/mt FOB base depending on the sales destination and volume. According to sources and their calculations, some of the mentioned deals were closed at $600-605/mt FOB and even below. Following these transactions, Turkish mills have started to offer mainly for October shipments on export and for October deliveries in the domestic market, although some of September volumes are said to be still available. In any case, as of now the mills are not under much pressure to drop prices and increased their export targets to $630-645/mt FOB, although $610-625/mt FOB levels are considered still workable. In the domestic market, the offers are even higher – from $660-680/mt ex-works to $700/mt ex-works and above in some cases. However, the buyers and some sellers consider that hardly anything above $640-650/mt ex-works would be workable in Turkey as of now. As a result, the lack of demand in the domestic market is not even compensated by the slack import segment. Basically, there is only China there with $580-585/mt CFR base available, while the rare bids are reported at $550-555/mt CFR.
In the UAE, even though ex-China offers have begun to fall, Emirati buyers have remained unwilling to book since local demand remains extremely low. According to reports, UAE offers from China for September shipments have dropped to $570-600/mt CFR, down from $600-625/mt CFR before. Furthermore, according to sources, ex-Japan offers have been received this week, with HRC offers to the UAE at roughly $605-610/mt CFR. Ex-Indian and ex-South Korean offers, on the other hand, have been quiet in recent weeks due to the slowdown in trading activity in the UAE. This mute position, particularly from India, is anticipated to persist as a result of their strong domestic markets.