Global View on HRC: Sellers in major outlets agree to give discounts to boost sales in weak environment

Sentiment in the global HRC market has been bearish this week and, though price declines have been rather limited in the main outlets, major HRC exporters have been ready to provide some discounts to accelerate sales.

Major Chinese HRC exporters have rolled back their previous small increases and managed to push some sales overseas. Also, increased competition with ASEAN exporters has resulted in additional discounts from China, though the domestic market is still rather stable. Major large Chinese mills have been offering at $500/mt FOB, down from $502-505/mt FOB late last week. The Chinese tradable SS400 HRC price (from small mills and traders) has lost $7/mt (the same amount as the increase announced in the middle of last week), coming to $485-487/mt FOB. Some deals at around $485/mt FOB have been done to South America and Africa. Though some market sources reported a large 50,000 mt sale of SS400 HRC from China to the Asian market at $470-475/mt FOB on Thursday, most market sources polled by SteelOrbis said it should be a non-VAT deal since by the end of the week no Chinese mill has been eager to give below $485/mt FOB.

In Turkey, HRC prices have been under pressure during the current week, but towards the end of the week mills have indicatively raised their offers slightly, citing higher import scrap prices. Domestic HRC offers first moved down to $580/mt ex-works, while later they moved back to the general range of $585-600/mt and up to $605/mt ex-works. As regards exports, some negotiations have been heard at $565/mt FOB during the week, with no luck in selling specifically to Egypt as bids were at $555-565/mt CFR. In Europe, 30,000 mt of Turkish HRC were sold to southern countries at $570/mt FOB. By the end of the week, some mills hiked export indications by $5/mt to the general range of around $575-595/mt FOB, though the $570/mt FOB level is considered workable if there is demand, especially from the EU. 

In the import segment in Turkey, Vietnam has set its offers at $555-560/mt CFR after selling 100,000 mt in the previous week at $525-530/mt CFR. Malaysia lastly sold at around $585/mt CFR and is currently not actively offering. China has remained at $535-540/mt CFR, following earlier deals at $530-540/mt CFR, including some payment extras.

The EU import HRC market is about to enter the holiday lull and, while domestic demand is almost completely silent, some import activity has still been seen for both slab and HRC. A 30,000 mt deal was closed to southern Europe from Turkey at $570/mt FOB or around €565-570/mt CFR including tax. In addition, an Italian mill, according to sources, has recently booked a full cargo of Indonesian slabs at $470/mt FOB or around $540-545/mt CFR for HRC grade. Offers from Vietnam stand at $540-545/mt CFR for HRC grade slabs, while China has been offering plate grade material at $570-590/mt CFR. Turkey has been offering slab at $560-560/mt CFR, while Algeria, according to sources, was offering indicatively at $490-500/mt FOB or around $530-540/mt CFR.

Local HRC offers across Europe have remained stable due to the lack of trade, with most players expecting a revival closer to early September. In Italy, the realistic level is at €700/mt ex-works, while producers intend to reopen sales after the holidays at minimum levels of €710-720/mt ex-works. Up north, prices are at €705-715/mt ex-works, around the same levels as reported in Spain. The highest targeted levels in Europe are at up to €730-750/mt ex-works, but they are not considered workable for the time being.

In North Africa, a 25,000 mt HRC sale has been closed to Egypt at $545-550/mt CFR from China, while the bids for Turkish HRC have been unworkable for the suppliers, at $555-560/mt CFR versus $590-600/mt CFR in offers. Export offers from Algeria for HRC have been at $590-600/mt FOB, while Egypt has been indicative at minimum levels of $610-615/mt FOB, but in the EU offers have been reported at $725/mt DDP with a limited CBAM fee included. In Algeria, the domestic HRC price is still officially at DZD 110,000/mt or around $690-695/mt ex-works. However, the workable level is lower, at DZD 103,000-105,000/mt ($650-660/mt) ex-works, buyers report. Egypt's local HRC is officially at EGP 40,000/mt or $685/mt ex-works.

Ex-India HRC trade has been limited to sporadic deals seen in the past week in the Southeast Asian region and Europe, though at discounts, while trade activity in the Middle East has been at a standstill owing to the renewed conflict in the region. The SteelOrbis reference price for ex-India HRC stood at $485-575/mt FOB early this week, down by $5/mt on average from the level seen late last week. There have been reports from the market that an eastern India-based mill reported a sale of 20,000 mt to Vietnam for August shipment at $485/mt FOB, while the previous negotiations for this destination were at $490/mt FOB at the lowest. This price translates to $515-518/mt on CFR basis. There has been a rumor about negotiations at $475-480/mt FOB ($510/mt CFR at the highest), according to some in trade circles, but this has been denied by most market sources, including those in Vietnam, as the price has been assessed as being too much on the low side. A large Indian mill has reported a sale of 20,000 mt for delivery to Rotterdam at $575/mt FOB, also lower than $580-590/mt FOB in some previous negotiations.

The SteelOrbis reference price for import HRC in Vietnam has settled at $515-520/mt CFR, decreasing by $3-5/mt CFR from late last week. The latest deal prices have been at $515-518/mt CFR for Indian and Indonesian HRC and one at $520/mt CFR North Vietnam. One contract for 30,000 mt of 3 mm HRC from Indonesia has been rumored at $509/mt CFR, but all local sources in Vietnam and from the exporting side agree that this reflects only customers' target price and is not the real market price level available. Moreover, some sellers, like Indonesia, have even withdrawn from offering by the end of the week as they did not want to reduce prices further. As regards exports from China, a sale of Q195 has been heard at $496/mt CFR, down by $1/mt from the previous contract for this grade. The price of Chinese SPHC 1 mm pickled and oiled coils has lost $5/mt to $555/mt CFR in Vietnam.