Global hot rolled coil (HRC) exporters have completed the week with some slight optimism, which may result in a price rebound in their sales for the next month of production. One factor is that China has made a positive return to the market after its holiday period and has seen some increase in its local market, which may create favorable sales conditions in the Asian region, specifically for some of the CIS-based HRC suppliers. In addition, there is an expectation in the market that increased energy costs may prevent HRC prices in the EU from recording further significant drops, although the upward effect is to have bigger significance in the longs segment.
- Electricity and gas prices have surged in the EU this year mainly because tight gas supplies (used across the region to generate a large percentage of electricity supplies) have collided with strong demand in economies recovering from the pandemic. At the same time, the cost of permits in Europe's carbon market has also contributed partially to the increase. The current price spike is taking a toll on EAF-based steelmaking, which is an energy-intensive process. Of course, the problem concerns long steel producers the most, as flat steel producers, except for a few cases such as Italy's Arvedi, are EAF-based. Some steelmakers have said they may consider halting their plants temporarily should cost prices reach critical levels. In fact, with winter approaching, the outlook is not good for any rapid end to the price increases. For now, however, trade in the HRC segment specifically is still weak and workable prices have once again declined over the past week in Europe.
- Any possible price rebound in the EU is expected to support first of all Turkish HRC exporters, which have been facing limited sales volumes to Europe in past weeks and such a situation has been undermining their price positions locally. This week, the prices for HRC in the local Turkish market dropped to $850-870/mt ex-works and even $10-20/mt levels [JF1] have been heard in the market. In the Turkish coated and CRC steel segment, prices have also seen quite a decrease over the past week amid some active destocking activity and rather aggressive prices offered by some re-rollers.
- China has come back to the market from its holiday in a positive mood and spot HRC prices have increased to RMB 5,870/mt ($909/mt) ex-warehouse, up RMB 95/mt ($15/mt) from the level before the holiday on September 30. However, some steel mills still hold a cautious view for the near future as re-rolling restrictions in the east of China may continue up to the end of this month. For instance, Jiangsu Province-based Shagang Group, China’s largest private steelmaker, has issued its list prices for hot rolled coil (HRC) for October this year, keeping them stable, reflecting its lack of expectation of a significant improvement in demand.
- Indian suppliers have managed to increase base HRC prices in their local market by INR 1,000-1,500/mt ($14-20/mt) for October, citing rises in input costs like coking coal and expecting a demand revival. As a result, the main exporters from India have decided not to give offers to the export market, rather than selling at a lower level. The focus in the export market is still on Asia and the Gulf regions.
- The general sentiment in Vietnam’s import HRC market has remained bearish as demand from end-users has failed to improve so far, even despite the better outlook held by Indian HRC suppliers and the price rises in China. The reference price is still at $870/mt CFR.
- Japanese HRC exporters have managed to avoid decreasing their prices in September below $1,000/mt CFR, unlike some other suppliers in the global market, even though overall allocation has started to increase due to lower consumption from the local auto industry.