Although the mood and the price trend for hot rolled coil (HRC) in China have started to demonstrate a certain optimism amid significant rebounds in futures prices, the drop in HRC prices globally has continued this week. While Chinese traders have been testing the market with higher offers, the overall market situation in Asia has remained negative with prices going down mainly due to the aggressive policies of Indian suppliers, who have decreased their offers by $40-50/mt since last week due to the need of suppliers to accelerate sales, and they have been successful in some destinations like Vietnam, the Middle East and Europe. In Turkey, aggressive import offers, from Russian mills in particular, have continued to put pressure on Turkey’s local prices. Besides, apart from Turkey, Russian suppliers have been offering their materials at lower prices in several international markets, though, with a lack of success, as payment remains an issue.
Following a significant decrease in China’s local and export HRC prices at the beginning of last week, this week started with positive sentiments in the Chinese HRC market on the back of the rebound in futures prices. Accordingly, ex-China export prices from big mills have moved sideways as sellers are watching further developments locally. In particular, export offers for boron-added SS400 HRC given by major Chinese mills are at $680-700/mt FOB for August shipment, with a midpoint at $690/mt FOB, the same as last week. However, Chinese traders, who last week were trying to sell at lower levels, have increased their prices by $25/mt and above. New Chinese offers from traders have increased to $680-685/mt CFR Vietnam, while the latest deals from Chinese traders selling a few position cargoes were reported at $650-660/mt CFR last week. Domestic HRC prices in China are at RMB 4,310-4,420/mt ($650-660/mt) ex-warehouse on July 1, with the average price level RMB 60/mt ($9/mt) higher as compared to June 24, according to SteelOrbis’ data.
Prices for Indian HRC have fallen this week by $50/mt to $630-660/mt FOB, from $680-710/mt FOB, as mills have been trying to accelerate sales in the export market as local demand is likely to remain limited in July and local prices are expected to go down further. The lowest price levels were in negotiations with Vietnam and the Middle East. Offers to the UAE from India have been reported at $710/mt CFR or $650-660/mt FOB, while an even lower level of $680/mt CFR or $630/mt FOB was reported as possible for this market.
In Vietnam, the situation in the import HRC market has started to change this week following the more positive sentiments among Chinese suppliers. In particular, new Chinese offers have increased to $680-685/mt CFR Vietnam, up by $25-30/mt over the past week. Meanwhile, offers for ex-China SAE1006 HRC have been heard at $705-720/mt CFR, compared to $700-710/mt CFR last week. However, despite positive news from China, lower-priced HRC deals at $670-680/mt CFR from India were discussed in Vietnam. At the same time, suppliers from India have decreased their offers for boron-added coils to $670-690/mt CFR Vietnam, compared to $695-710/mt CFR at the beginning of the week and down by $10-20/mt week on week. Meanwhile, Russian HRC suppliers have announced their offers to Vietnamese buyers at $640/mt CFR for August shipment, down by $40/mt over the past week. However, despite the attractive price, no deals have been heard due to payment problems, according to sources. As a result, the SteelOrbis’ reference price for import SAE1006 HRC has moved to $670-710/mt CFR, compared to $700-710/mt CFR, considering the lower offers coming from India in contrast to the stronger sentiments in China.
Turkish HRC prices have declined this week to $680-700/mt ex-works base, while $10/mt lower offers have also been reported in the market. Moreover, some sources reported a sale at $650/mt ex-works in the domestic market, although this level has not been widespread. Moreover, following the price increase in the import scrap market, expectations improved in the flats market, and mills are expected to increase their offer levels next week. Some have already started indicating $700-720/mt ex-works, but in the coming days the market situation will gain some clarity. Exports remain a problem for the mills as their offers of $680-700/mt FOB are not workable in the EU, where domestic and import HRC offers have been constantly decreasing. In the import segment, only Russia and India have been present this week. India has been offering at $660-670/mt CFR. Ex-Russia offers depending on the mill were at $615-670/mt CFR early this week, but later on they were withdrawn from the market.
In Europe, HRC prices have still been trending down over the past week, while buying interest has remained weak amid very scarce transaction activities due to weak demand both from end-users, including the automotive sector, and distributors who still have high stocks, coupled with logistics problems at ports. This week, the workable HRC prices in the local market in the EU have settled at €780-880/mt ex-works, compared to €820-900/mt ex-works last week, though, according to sources, Italian buyers expect to buy at a maximum of €750 ex-works, while in northern Europe €850-860/mt ex-works may be the maximum workable level currently. In the import segment, the general offer levels are at €720-760/mt CFR, compared to €760-820/mt CFR last week, with the lower end corresponding to ex-Turkey and ex-India HRC offers. According to market insiders, transactions have remained scarce in the southern European HRC market, and only talk of deals for ex-India boron-added coils signed at around €720/mt CFR Italy has been circulating in the market this week.
Generally, this week Russia has been offering to many markets aside from Turkey. Specifically, its offers were reported in the UAE, Pakistan, Vietnam, and India; however, the producers could not sell due to the negative market mood and sanctions-related issues. Ex-Black Sea prices for Russian HRC were standing at $570-620/mt FOB this week, while in Asia Russian mills’ offers were estimated at $550-570/mt FOB Far Eastern ports. Moreover, by the end of the week, Russian mills have started to increase their prices also, but mainly for the Turkish market, trying to take advantage of the market uptrend and the scarcity of import offers. In particular, MMK has started voicing $650/mt FOB for August shipments, SteelOrbis has learned. Along with the challenging export situation, which is also being weighed on by the strong rouble, Russian mills have trouble selling flats to their local market, given the sanctions-related decline in demand.