This week has turned out to be somewhat turbulent in terms of hot rolled coil (HRC) prices coming from China to many regions, with higher levels heard at the beginning of the week and then with new discounts, while by the end of the week higher levels have again been seen amid fluctuations in futures prices in China. More specifically, customers from different regions, including those from Asia, Turkey and the Middle East have reported ex-China offers at higher levels by the end of the week, after some discounts had been provided by a number of Chinese traders in the middle of the week. In the meantime, in Europe, local producers have been forced to drop their HRC prices again given the impossibility of competing with cheap imports, although sources believe import prices have apparently hit bottom levels.
Following a continuous recovery in futures prices in China since last week together with stronger domestic prices, Chinese HRC mills have decided to increase their export offers this week. However, at the beginning of the week offers from traders increased as well, though some discounts were provided in the middle of the week amid futures price fluctuations, while by the end of the week the tradable level has recovered again. More specifically, export offers for boron-added SS400 HRC from large major Chinese mills are at $560-590/mt FOB, with a midpoint at $575/mt FOB, up by $22.5/mt week on week. At the same time, the tradable level for Chinese SS400 HRC has increased as well, standing at around $540-550/mt FOB, up by $15-20/mt over the past week. In particular, by the end of the week, offers for ex-China SS400 HRC from traders in Vietnam have been voiced at $555/mt CFR, the same as at the beginning of the week, but versus $545/mt CFR in the middle of the week. Meanwhile, ex-China Q195 HRC offers in Turkey have settled at around $590-595/mt CFR, up by $20-25/mt week on week, while offers in the Middle East, the UAE in particular, have been reported at around $595-600/mt CFR, compared to $570-580/mt CFR last week. In the SAE1006 HRC segment, offers from Chinese suppliers have settled in Vietnam at around $580-585/mt CFR by the end of the week, versus $575-580/mt CFR last week. Domestic HRC prices in China were at RMB 3,790-3,990/mt ($531-560/mt) ex-warehouse on June 8, with the average price level RMB 125/mt ($17.5/mt) higher compared to that recorded on June 1, according to SteelOrbis’ data.
Indian HRC mills have started to withdraw offers or have already voiced higher levels, seeing an improvement in the market mood after the rebound which started in China. Besides, according to market insiders, HRC export prices seem to have reached the bottom. In particular, ex-India SAE1006 2 mm HRC prices have settled at $580-600/mt FOB, compared to $550-600/mt FOB late last week. The tradable level for all major destinations is still below the $600/mt FOB mark, but, while last week there was one deal done at as low as $550/mt FOB, this week all mills’ targets are hardly below $600/mt FOB. Indian mills have mostly withdrawn offers from the UAE this week, preparing for an increase, with the last official levels being at $625-630/mt CFR or $590/mt FOB, while new levels from India in Vietnam are definitely expected to be above the $600/mt CFR mark.
Following sharp increases in HRC prices from Chinese suppliers and traders for Vietnam at the beginning of this week, by Wednesday, June 7, the uptrend was reversed with ex-China HRC offers falling back to last week’s levels due to an unexpected slump in futures prices in China. However, by the end of the week, the situation has changed again, bringing a new rise in ex-China HRC offers in Vietnam. More specifically, on Friday, June 9, market insiders have reported new ex-China SS400 HRC offers at $555/mt CFR, versus $545-547/mt CFR in the middle of the week. At the same time, the SteelOrbis reference price for import SAE1006 HRC has moved to around $575-580/mt CFR, versus $570/mt CFR in the middle of this week, given the recovery in ex-China offers.
In Europe, HRC producers have been forced to drop their HRC offers again this week given the impossibility of competing with cheap import prices. However, although import HRC offers have decreased once again in Europe this week, most market insiders have the feeling that import HRC prices have finally hit the bottom. In particular, HRC offers from European mills have been heard at €650-720/mt ex-works, versus €680-770/mt ex-works last week, with the lower end of the range corresponding to the tradable level for HRC in Italy, while customers in northern Europe have estimated the workable price level at €700/mt ex-works, down by €20-50/mt over the past week. However, offers from some mills have been heard at €720-740/mt ex-works, down by €20-40/mt over the past week. Meanwhile, import offers to southern Europe have settled at around €580-605/mt CFR, down by €20/mt from the higher end of the range over the past week. Offers from Southeast Asian suppliers, including Vietnam and Indonesia, have been heard in Italy at the lowest level among all suppliers at €580/mt CFR, with some for ex-Vietnam even reported at €560/mt CFR. Furthermore, import offers for ex-Asia HRC in northern Europe have been heard at €600-610/mt CFR, the same as last week.
Turkish HRC producers have taken advantage of a less aggressive China and have managed to not only avoid further price drops in the domestic market, but have also started to increase their offer indications by the end of the week. Along with China’s price increase by around $20-30/mt over the past week to $590-595/mt CFR for Q195 material, Turkish mills have managed to conclude some sales in the domestic market mostly at $650-670/mt ex-works base. The volumes are reported to be not so large in total, but the very fact of relatively better trade has allowed them to start voicing domestic offers at as high as $690-700/mt ex-works for August deliveries. Still, many market players believe that the Chinese rebound will not be sustainable and that the current offers will hardly gain acceptance in Turkey. However, if HRC prices in the EU, domestic and import, bottom out shortly as expected, other Asian suppliers may restart paying closer attention to the Turkish market. The latest offers from India have been at $630-635/mt CFR, while a deal from Japan has been reported at $610/mt CFR to a re-roller.
In the UAE, HRC import offers from ex-China have begun to rebound, while other Asian suppliers offer additional discounts. However, with China's prices rebounding, it is anticipated that in the coming days the offerings from other Asian suppliers will be impacted and will trend upward. According to reports, current Chinese offers for July shipments to the UAE have increased to $590-600/mt CFR, up from $570-575/mt CFR before. In the meanwhile, offers from India to the UAE for shipments in July have dropped by $10-15/mt to $615/mt CFR from last week. A similar decreasing trend has been seen in South Korean offers, which are currently at $555-600/mt CFR UAE for July-August shipment, after previously being at $635/mt CFR.