This week, the prices for hot-rolled coils (HRC) have continued falling in the key global markets. In the EU and Turkey, the size of the provided discounts was much more significant, taking into account that previously prices had increased too much and, according to sources, the market is coming back to reality. In addition, low demand affected the trend in both markets, but in Turkey the downturn was additionally fueled by the aggressive price policy of one of the local re-rollers. In Asia, where the prices had already been at more reasonable levels, the market has seen another expected weakening of offers, resulting in another drop in China.
In Turkey, the flats market has been hit by a significant decline in prices announced by one of the re-rollers for its various ex-warehouse products. The producer’s offers were set at levels up to $200/mt lower than the general market range, and so the situation had a major effect on other suppliers’ positions. As a result, HRC prices in the domestic market decreased by another $60/mt in official offers to $890-950/mt ex-works base. However, sources believe levels of $860-880/mt ex-works are already achievable. In the import segment, Chinese suppliers are the most competitive with $830/mt CFR, while India is the next most competitive with $850/mt CFR as an official offer. Export prices for HRC from Turkey fell to around $890-900/mt FOB in the lowest offers, while some mills are still at the levels closer to $950/mt FOB.
Europe is still the main target for ex-Turkey HRC sales, though competition is fierce. The domestic prices in the south of the EU have dropped drastically over the week to €1,000/mt ex-works as in the workable levels in Italy and Spain, while higher offers are also available in the market. Import offers from Asia have settled for now at €890-930/mt CFR southern ports depending on the supplier, while Turkey has been offering at €920-930/mt CFR. Moreover, the local prices in Europe are expected to continue falling due to the lack of demand and taking into account that the offers had been much inflated previously due to the panic caused by the war in Ukraine.
Ukraine remains mostly out of the global steel trade, working on the rerouting of mills’ logistics to Europe, aiming to increase its presence there since the country’s seaports are not available and given the recent decision of the EU to abolish import duties for ex-Ukraine goods, including steel products. As for Russia, around 30,000 mt of HRC were traded to India at around $710/mt CFR.
Falling ex-China HRC prices have continued to contribute to the rapid decline in the import HRC market in Vietnam, where the reference price has dropped to $780-790/mt CFR, down by 20/mt over the past week, as at this level there have been offers from China. There has been a lack of competitors for China in Vietnam as fresh offers from India has been at $810-840/mt CFR, compared to $850/mt CFR last week, and ex-Japan/Taiwan coils have been offered at $870/mt CFR this week. At the same time, Vietnamese steel producer Formosa Ha Tinh Steel announced new local prices for HRC SAE1006 (no-skin passed) for July shipment at a level $95/mt lower than last month at $855/mt CIF. However, despite the significant decrease, the new prices of the producer are still much higher compared to import quotes.
Indian HRC exporters have dropped their offers to $790-850/mt FOB, with the lower end down by $10/mt and the higher end of the range slipping by $70/mt, from $800-920/mt FOB settled late last week. However, despite the decrease in ex-India export prices, sales volumes have not increased much with buyers having the cheaper alternative ex-China option for sourcing at below $800/mt FOB mark. According to sources, the only positive is that realizations from sales in the Gulf are ensuring slightly better realizations than sales in other regions. In particular, a deal for around 10,000-15,000 mt of ex-India SAE1006 HRC has been reported at $910/mt CFR UAE, while by the end this week, HRC offers from India have come to $880/mt CFR UAE.
In China, the ongoing resistance of most foreign customers affected by weaker demand has forced Chinese HRC exporters to lower their prices this week, even despite a slight recovery in HRC futures prices. Thus, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $770-800/mt FOB for June shipment, with the average price $15/mt lower compared to last week, though offer prices of $730-740/mt FOB have been heard from smaller mills and traders. Meanwhile, the tradable level for ex-China SS400 HRC has been heard at $730-760/mt FOB, down by $20/mt on the higher end of the range week on week. However, despite the decrease, most foreign buyers have not been in a hurry to sign new deals in anticipation of further discounts. Meanwhile, domestic HRC prices in China are at RMB 4,780-4,850/mt ($716-727/mt) ex-warehouse on May 20, with the average price level RMB 125/mt ($19/mt) lower as compared to May 13, according to SteelOrbis’ data.
