Global hot rolled coil (HRC) exporters have completed this week amid strong pessimism, which may result in further drops in their prices in the next round of sales. The main factor is that Chinese HRC exporters have continued to go lower in their prices this week given the falling trends of futures and local HRC prices in China. Besides, in Asia, suppliers have kept decreasing their offers to all main destinations, succeeding in concluding new sales at lower levels to Europe and the Middle East. In Turkey, the HRC market has remained negative as well, with Chinese suppliers being the most aggressive in the country.
Following the declines seen in the local spot market and given the decreases in futures price, at the beginning of this week export offers for boron-added SS400 HRC given by major Chinese mills dropped to $600-630/mt FOB for June shipment, with a midpoint at $615/mt FOB, down by $20/mt week on week. However, by the end of the week, most offers from big mills have dropped to $600-615/mt FOB. At the same time, the tradable price level for SS400 HRC coils was heard at $545-570/mt FOB, down by $35-40/mt week on week, with the lower end of the range corresponding to offers in Vietnam, while by the end of the week offers have been adjusted up slightly to $550-580/mt FOB. According to sources, this move is not seen as a rebound but as a “more realistic approach”. Furthermore, Chinese suppliers have continued to focus on expansion of sales to higher-priced destinations, like Turkey, where, after selling at least 30,000 mt at $635 CFR at the end of last week, new ex-China offers for Q195 HRC have dropped to $610-620/mt CFR this week. Domestic HRC prices in China have settled at RMB 3,940-4,200/mt ($569-606.8/mt) ex-warehouse on April 27, with the average price level RMB 140/mt ($20/mt) lower compared to April 21, according to SteelOrbis’ data.
Ex-India HRC official offers have been kept almost unchanged by sellers, but trades have been reported at lower levels only, and for smaller tonnages than seen last month. Ex-India SAE11006 2 mm reference HRC prices have been at $660-720/mt FOB, down by $5/mt on average from late last week. The lower end of the range reflects one successful trade in the Middle East, though overall competition has been tough, given the aggressive Chinese offers. The higher end of the range has not changed from that seen last Friday, with EU buyers still accepting higher valuations, but the pressure from lower ex-Asia offers has been growing in this market too. Ex-India offers in Vietnam at $670/mt FOB have been entirely unworkable as bids were not higher than $620/mt FOB, and hence sellers were not following up the offers already submitted.
Import HRC prices in Vietnam have continued to decrease this week mainly due to the sharp price falls for ex-China materials influenced by the slump in futures prices. In particular, offers for ex-China SS400 HRC have been voiced at $555-565/mt CFR, down by $15-25/mt week on week. However, according to market insiders, despite such a sharp drop, deals have been very scarce so far, while by the end of the week most traders have adjusted their offers up to $560-570/mt CFR. Meanwhile, offers for ex-China SAE1006 from Chinese suppliers have been rare this week, with the indicative level from traders standing at $610/mt CFR on Friday 28, versus $605-610/mt CFR at the beginning of this week and compared to $640-650/mt CFR last week, while Chinese mills have been offering their materials at $625/mt CFR. Thus, the SteelOrbis reference price for imported SAE1006 HRC in Vietnam has come to $605-610/mt CFR, impacted by the most competitive offers from China, while other foreign suppliers have mainly been out of the market with the indicative offers higher by at least $50/mt.
Despite the bearishness mounting globally, most European HRC mills have been trying to avoid significant price declines locally this week. According to sources, while the tradable price level in Italy has been estimated at €830-840/mt ex-works, down by €10/mt week on week, Italian mills have either been keeping their offers at €850-860/mt ex-works or have simply been out of the market. Tradable HRC offers in northern Europe have dropped by €10/mt week on week as well, to €840/mt ex-works. However, trade activity has also been slack in the north, as most suppliers have been citing full order books and have not been giving firm offers for HRC. Meanwhile, competitive import offers have been exerting pressure on domestic prices. In particular, import HRC prices in southern Europe have dropped to €675-715/mt CFR, versus €690-725/mt CFR last week. More specifically, offers from Vietnam and Taiwan have been the most aggressive this week, standing at $745-760/mt CFR, or €675-688/mt CFR, down by €12-25/mt week on week, with a several deals for ex-Vietnam materials reported to have been signed at the abovementioned levels. Offers from Japan and South Korea have been voiced at around €715/mt CFR southern Europe, down by €10/mt week on week, while offers for ex-India HRC have remained mainly unchanged over the past week, standing at $760-770/mt CFR (€688-697/mt CFR).
The Turkish HRC market has remained rather silent this week, while prices have continued dropping. In fact, ex-China offers have been reported this week at $610-620/mt CFR for Q195 grade, down from a 30,000 mt sale at $635/mt CFR early last week. While some sources believe these levels are unnecessarily low, others evaluate that deals may be closed at $590/mt CFR and even below. However, this level is considered to be the rock bottom and a certain rebound may be seen in the Turkish import segment after the elections. In the domestic market, mills’ prices have decreased to $740-760/mt ex-works this week, versus $780-800/mt ex-works earlier, due to the pressure in the import segment. As regards exports, the producers admit that levels close to $700-710/mt FOB should be workable, but the official offers are still around $30/mt higher.
In the UAE, while ex-China offers have continued to fall and it is expected that this trend will continue, Emirati buyers have decided to hold back from purchases considering the weak end-user demand and volatile import prices. As a result, ex-China SS400 HRC offers for June shipment have fallen by $20-40/mt to $600-630/mt CFR from the previous week. On the other hand, the majority of Indian mills keep holding back their offers because the UAE market has proven unworkable for their lowest offers, which are at $720/mt CFR. Nonetheless, there has been market speculation this week that an Indian mill sold a small quantity of re-rolling grade HRC to the UAE at $690/mt CFR, but this has not been confirmed by the time of publication. In addition, South Korean HRC offers for June-July shipments have also witnessed a reduction from the week before by $25/mt to $715/mt CFR, whereas Japan has offered at $690/mt CFR for June shipments.