The workable hot-rolled coil (HRC) prices in the European Union and Turkey have decreased significantly over the past week due to lagging demand, the approach of Easter, Ramadan, and the generally pessimistic expectations among the buyers. Still, despite the discounts provided, HRC offers on this side of the globe are much higher as compared to the Asian markets. India has further dropped its offers, trying to boost export sales, and China has also cut offers amid coronavirus-related lockdowns and transportation restrictions.
The Russian mills, in this situation, are forced to follow the global trends, with no ability to exert influence and no chance for their HRC to become a benchmark, at least for now. Severstal and MMK are trying to collect orders and to figure out ways to receive payments, and to insure and ship cargoes, specifically to Turkey and the Far East. In the meantime, NLMK seems to have less problems for now as its owner has not been sanctioned yet, but a lot of buyers still consider business with it to be risky.
In Turkey, local producers revised their domestic HRC offers in two steps this week from $1,250-1,350/mt ex-works to $1,200-1,250/mt ex-works and even lower levels may be available for some serious and sizeable orders. Still, though the price decrease over the past week is significant, buyers consider it not to be enough versus competitive imports - $960-975/mt CFR from China for Q195 quality and $1,090-1,100/mt CFR officially offered from India. Many sources expect Turkish HRC to decrease sharply in May, but a lot will depend on the situation with deliveries from China. As SteelOrbis reported, since late February Turkey has booked huge volumes of flats from China at prices much lower than domestic prices. However, whether there will be any significant delays in the shipments of these cargoes due to Covid-related lockdowns is not yet clear.
In the European market, business activity has as expected declined before the Easter holiday and prices have continued to move down. The latest workable HRC levels in southern Europe are now at €1,250-1,300/mt ex-works, against €1,280-1,300/mt ex-works recorded at the beginning of this week. However, buyers are not in a rush to purchase, since they had restocked enough earlier. In addition, they have been receiving import offers at €1,100-1,150/mt CFR mainly from Asian suppliers, which is €20-50/mt lower than a week ago. The downtrend in the import segment has been putting additional pressure on local pricing and a majority of market players expect HRC prices in Europe to decrease further next week.
In Vietnam, offers for SAE1006 HRC from Chinese traders with positions have decreased by $10-15/mt to $900-915/mt CFR over the past week, while Chinese mills have decreased their prices to $915-925/mt CFR, from $938-940/mt last week. In the meantime, Chinese traders are reported to have signed several deals for SS400 HRC at $865-870/mt CFR, down by $20-25/mt over the past week, while customers’ bids have come to $855/mt CFR by the end of the week. Thus, the SteelOrbis’ reference price for import SAE1006 HRC has moved to $900-925/mt CFR, compared to $915-938/mt CFR last week.
Meanwhile, despite strong pressure from Chinese suppliers, this week Vietnamese steel producer Formosa Ha Tinh Steel has increased its prices for re-rolling grade SAE1006 HRC (non-skin passed) to local buyers to $950/mt CFR, up by $20/mt month on month, while its skin-passed SAE1006 coils are reported at $955/mt CFR, compared to $935/mt CFR last month. The producer has decided to increase its prices, though lower than initially expected, amid high raw material prices and still strong demand overseas.
Aiming to boost export sales, Indian HRC exporters have continued to decrease prices for their main sales destinations, the Middle East and Europe this week. Besides, slow demand in the local market has put additional pressure on Indian HRC suppliers. Thus, ex-India HRC prices have dropped further to $950-1,1000/mt FOB, down by $60/mt on the lower end and down $50/mt on the higher end of the range reported earlier this week, while on week-on-week basis prices have lost $85/mt on average. Several deals have been signed with European customers in the range of $1,100-1,130/mt FOB this week. In the meantime, offers from India to the UAE have been reported at $1,020-1,060/mt CFR, which translates to $960-990/mt FOB. Furthermore, market insiders have been discussing a deal for Indian coils signed with UAE customers at $1,000/mt CFR, though this information has not been confirmed by the time of publication.
In China, the major mills have decreased their offers for boron-added SS400 HRC by $15/mt on average to $870-900/mt for June shipment following the declines seen in futures prices due to the recurring outbreaks of the Covid-19 pandemic and transportation restrictions in the country. Meanwhile, the tradable price level for SS400 coils has been heard at $835-890/mt FOB, with the lower end of the range corresponding to offers for Asian buyers, while the higher end of the range was achieved in offers for higher-priced markets, the EU, Turkey and the Middle East. In particular, several deals for ex-China SS400 have been signed at $865-870/mt CFR Vietnam this week. However, offers for Chinese SAE1006 HRC have remained at around $1,030/mt CFR Turkey, while customers in the UAE have reported ex-China offers at $975/mt CFR. Domestic HRC prices in China have remained unchanged over the past week, standing at RMB 5,220-5,280/mt ($820-830/mt) ex-warehouse on April 15.
