The mood and the price trends for hot rolled coil (HRC) in Asia have been demonstrating a certain pessimism, exerting pressure on other regions globally. The overall market situation in Asia has remained negative with prices going down due to the aggressive policies of Chinese traders and mills, while in India sellers have decreased their offers by $30-50/mt, seeing improved levels of buying activity, largely in alloy categories, from Vietnam. In Turkey, buyers have been insisting on sizable discounts in the import segment, while Russian HRC suppliers have continued to aggressively decrease their offers. In the meantime, the European market has continued to drop in terms of domestic and import prices, with bearish sentiments prevailing.
In China, HRC export prices have tumbled this week as the previous recovery of local prices has been reversed. In particular, at the beginning of the week, export offers for boron-added SS400 HRC given by major Chinese mills were at $730-750/mt FOB for August shipment, with a midpoint at $740/mt FOB, posting a $32.5/mt decrease on average compared to last week. However, by the end of the week several Chinese mills have decreased their export offers for boron-added SS400 to $680-720/mt FOB, from $705-740/mt FOB announced earlier this week. Other mills, however, who were offering the materials have stopped offering, preparing for new drops. Domestic HRC prices in China are at RMB 4,620-4,760/mt ($689-710/mt) ex-warehouse on June 17, with the average price level RMB 220/mt ($33/mt) lower as compared to June 10, according to SteelOrbis’ data.
In Vietnam, on June 14 local HRC producer Formosa Ha Tinh Steel dropped its local prices for August deliveries by $100/mt to $755/mt CFR (non-skin passed). However, by the end of the week, the producer has announced a downward revision of its prices for HRC by $35/mt to $720/mt CFR. This move was explained by the rapid falls in Chinese HRC offers. In particular, after several deals for ex-China SS400 HRC were reported at $730-738/mt CFR this week, new offers have been dropped to $700/mt CFR and even below. Meanwhile, the lowest level for ex-China SAE1006 HRC has been voiced at $720/mt CFR, compared to $755/mt CFR at the beginning of this week. At the same time, market insiders have also reported several deals signed for ex-India boron-added HRC at $738-750/mt CFR Vietnam over the past two weeks. The total volume of these deals is estimated at above 50,000 mt. The reference price for imported SAE1006 HRC has dropped to $720-725/mt CFR, compared to $745-755/mt at the beginning of this week, and down by $30-45/mt week on week.
The SteelOrbis ex-India SAE1006 HRC reference price has been lowered to $695-730/mt FOB, $30-50/mt below last week’s levels. A deal for 30,000 mt of ex-India boron-added SAE1006 HRC was signed in Vietnam at $738/mt CFR, corresponding to about $708/mt FOB, while the previous sale was at around $750/mt CFR. But some market sources said that the deal was already an old one and, taking into account that the market has weakened further since then, $695-700/mt FOB has been assessed as tradable for now and bids from buyers are expected to come at $690/mt FOB. Since alloy HRC from India is excluded from the 15 percent export tax, Indian mills may consider lower prices, otherwise they will not be able to be present in the market. The higher end of the range ($730/mt FOB) corresponds to the price level for the Gulf market, though no new deals have been reported so far.
In Pakistan, foreign HRC suppliers have continued to revise their offers downwards in order to obtain orders. Accordingly, a deal for around 40,000 mt of ex-Japan SAE1006 HRC has been reported at $820-830/mt CFR, down by $10/mt week on week. Besides, another deal for 30,000 mt of ex-Taiwan SAE1006 HRC has been signed at $810-820/mt CFR, down by $10-20/mt over the past two weeks.
In Turkey, the HRC market has remained under pressure from low demand from re-rollers and pipe-makers, who in turn have been having troubles selling their own products. The demand for coated steel is described by several sources as “dead” and prices are set to move down further. As for HRC, some mills in the local market are trying to stick to $780-800/mt ex-works officially, though one producer has already started offering at $750-760/mt ex-works, which is closer to the current market reality. Export prices have decreased by $30-40/mt over the past week to $760-780/mt FOB, but levels $10-20/mt lower are considered possible. Demand in the EU is almost non-existent due to falling local prices and competitive offers from Asia. In the import segment in Turkey, additional pressure has been coming from aggressive Russian pricing. After deals at $740-745/mt CFR, Turkish buyers have demanded sizeable discounts since the market has weakened since then. As of the end of the current week, Russian mills are ready to sell at $700/mt CFR and even $680/mt CFR levels have been voiced. Freight to Turkey is estimated at around $40-50/mt.
In the slab market, the Russians have again been the most aggressive in the global market, once again due to sanctions-related risks and burdens. In the Black Sea area, a deal for ex-Donbass slab was closed at $570-575/mt CFR Turkey, while Russian mills offered their slab at $590-600/mt CFR and even at $580/mt CFR at the end of the week. The main reason is the declining scrap and HRC price in Turkey, coupled with the tough situation in the coated steel segment in terms of sales. In Asia, the market is generally unfavorable for slab trade since HRC prices have decreased. During the week, the slab offers from Russia to China were mainly at $590-600/mt CFR levels, but, according to some sources, have slid further to $570/mt CFR. Moreover, taking into account the sharp decrease in the Chinese HRC market, even lower workable prices for slabs may be seen from Russia.
In Europe, HRC prices have still been trending down over the past week, while buying interest has remained minimal due to continuing weak demand from both end-user sectors, the automotive and white goods industries in particular, and distributors who have still had quite high inventories and a lower order intake from consumers. This week, the workable HRC prices in the local market in the EU have settled at €840-940/mt ex-works, against the levels of €890-970/mt ex-works reported last week. But prices in Italy are approaching the €800/mt ex-works level, as mills are said to be desperate for orders, while demand is weak due to sufficient stock levels. In the import segment, the general offer levels are at €790-850/mt CFR, down by €10/mt week on week, with the lower end of the range corresponding to import offers in the Italian market and with the higher end of the range in Spain. The most attractive offers have been heard for ex-Turkey HRC at €790-800/mt CFR Italy, duty paid, down by €30-40/mt week on week. Although foreign HRC suppliers have once again pushed prices down, trying to boost sales, trade activity has remained muted in the region.