The rapid drop in hot rolled coil (HRC) prices globally has continued this week with the sharp downtrend in Asia remaining one of the main triggers. China and other Asian countries have posted sharp declines in new deals signed globally, exerting pressure on suppliers from India and Turkey. In particular, in India, despite slight price drops, exporters have failed to attract buyers, while Turkish mills being squeezed by high production costs have likewise been unsuccessful. In the EU, mills have also kept reducing their HRC prices, while import offers have remained competitive, exerting more pressure on domestic prices.
In China, HRC export offers have dropped again this week following the decrease in futures and local HRC prices in the country. In particular, export offers for boron-added SS400 HRC given by major Chinese mills have come down to $550-565/mt FOB, with a midpoint at $557.5/mt FOB, down by $15/mt over the past week. Meanwhile, the tradable level for ex-China SS400 HRC has shown an even more dramatic fall, dropping to $520-540/mt FOB from $550-560/mt FOB last week. According to market insiders, most ex-China SS400 HRC offers from traders have been heard in Vietnam at $540-545/mt CFR, down by $20-25/mt week on week, though several deals have already been heard at $535/mt CFR Vietnam. Domestic HRC prices in China are at RMB 3,810-3,830/mt ($526-529/mt) ex-warehouse on October 21, with the average price level RMB 75/mt ($10.4/mt) lower as compared to October 14, according to SteelOrbis’ data.
In Vietnam, prices for import HRC have continued to plunge this week as all main foreign suppliers have been offering cargoes at much lower levels. However, Vietnamese buyers have not been in a hurry to sign new deals, counting on a further downward correction. In particular, the prices available for ex-China position SAE1006 HRC have been as low as $565-570/mt CFR, compared to $575-585/mt CFR last week, while several bids have been invited already at $560/mt CFR. Besides, cheap position cargoes from China for SS400 HRC have been reported to Vietnam at $535-540/mt CFR, down by $15-20/mt week on week, with a few deals for small tonnages signed at $535/mt CFR. At the same time, offers for ex-Japan HRC have settled at $570/mt CFR, compared to $580-590/mt CFR last week, with a deal reported at $565-570/mt CFR this week. Offers for ex-Taiwan HRC have been heard at $570/mt CFR, down by $20/mt week on week. Besides, market insiders have reported that Russian suppliers, who are rarely heard in Vietnam, have been offering their HRC at $560/mt CFR Vietnam this week. The SteelOrbis reference price for import SAE1006 HRC has moved to $560-570/mt CFR, down by $15-20/mt over the past week, given the bearish mood of most foreign suppliers coupled with lower and lower bids coming from Vietnamese buyers.
In Turkey, where local mills are still keeping their official HRC prices at $680-710/mt ex-works, import offers from Asia become more and more attractive. China is offering the lowest level at $580-585/mt CFR, down $10/mt from early this week, and one of the deals has already been closed at $590/mt CFR for re-rolling grade. The same level was fixed in a deal from South Korea in addition to sales at $605-625/mt CFR closed earlier. Some Asian sellers like Japan and India are offering at up to $630/mt CFR Turkey, while Vietnam and Indonesia are at $605/mt CFR, and Taiwan is offering at $610/mt CFR. Overall, the large difference between local and import prices in Turkey is expected to result in some serious production cuts on the local HRC side, given that stopping the rolling lines for a certain period of time will mean a lower rate of loss for mills compared to sales at a $70-80/mt discount from current official offers.
In Europe, HRC prices have declined further this week, though distributors across the region still have sufficient stocks and so they are not in a hurry to buy and prefer to wait in view of the ongoing downtrend of prices. The general range in the EU HRC market is currently at €650-700/mt ex-works, down by €40-60/mt over the past week. More specifically, the tradable level estimated by Italian mills is at €690-700/mt ex-works, down by €20-40/mt week on week, though most buyers estimate the achievable level at €650-670/mt ex-works. In northern Europe, most customers have reported the tradable level at €650-680/mt ex-works, down by €40-50/mt over the past week. At the same time, competitive import offers have kept exerting pressure on domestic prices. Import HRC offers to southern Europe have settled at €650-690/mt CFR, depending on the origin, compared to €650-700/mt CFR last week. Furthermore, European HRC suppliers have also been heard in the export markets this week and according to market insiders, a deal for ex-EU HRC from one of the leading European mills has been signed to Turkey at $660/mt CFR, which translates to around $610/mt FOB or €620/mt FOB.
Indian HRC exporters have reduced their prices slightly, but the decreases have been insufficient to drive any sales amid increasingly bearish market conditions across the Asian and Gulf regions and high competition in almost all markets. Ex-India HRC prices are down by $10/mt over the past week to the range of $550-570/mt FOB, but very few offers have been reported at this level and again there have been more competitive offers for buyers, and so no new deals have been reported. In general, Indian mills have also been inactive ahead of the festival season.