As the holiday period is approaching, the business activity for HRC in some parts of the world has been slowing down, specifically in Europe and the CIS. Workable price levels have been also weakening, being under pressure of low demand and partly of tough financial situation in Turkey. In Asia, aggressive ex-India HRC offers and actual concluded deals have been the main news of the week. Moreover, Indian suppliers have started to offer lower prices to Turkey too.
- The CIS-based HRC exporters are mainly relaxed and are getting ready to leave the market for a traditionally long vacation. All of them are long sold out for January production, but only two out of four have started offering for February. The prices from Severstal have remained at indicative level of $890-940/mt FOB Baltic Sea, but the sales are not there since the European buyers are also off. Metinvest has been in talks with Turkey at $800-810/mt CFR while the freight is estimated at $30-35/mt.
- Business activity in the European market has been minimal this week, being affected by the upcoming holiday period. The workable HRC prices across the EU have declined by €10/mt on average to €830-850/mt range in the Italian market and to €890-930/mt range in northern Europe, all ex-works. Business is expected to get back on track by mid-January, although most of the market players exclude the confident demand recovery in the short-run as there are still questions with the demand from the end-user industries. In the meantime, the costs of production remain high and, combined with the logistic issues, those might somewhat support the steel prices.
- In Turkey, the business activity in the HRC segment has been heavily weighed on by the financial situation in the country and low demand for cold-rolled and coated steel products. Although the domestic prices for HRC have remained relatively stable over the week at $830-850/mt ex-works, some suppliers might be more aggressive for the remaining lots for February deliveries. In the import segment, despite that the number of offers is limited, the suppliers decreased the prices by around $15-20/mt, specifically for HRC from India and Ukraine.
- Indian mills have been among the most active and competitive in the Asian HRC market this week. Producers have faced continuous cuts in prices in the local market and weakening of demand, so they have been trying to push volumes overseas. Ex-India HRC prices have been in the range of $730-760/mt FOB versus $740-800/mt FOB last week, but now more offers have been heard at closer to the lower end of the range. Moreover, some discounts are still possible for Asian customers. Even lower prices have been reported for Indian coils to Vietnam by the end of the week from traders, going short. A few bookings have been done also to the Middle East at lower level - $750/mt FOB or slightly above, but still at premium to the tradable levels in Asia.
- Loyal price policy of the Indian HRC mills has naturally resulted in further downturn in the Vietnamese market, where the import prices decreased by to $785/mt CFR for SAE1006 in one deal and further weakened to $780/mt CFR in offers. Moreover, the short position sales have been rumored as closed this week at as low as $770/mt CFR and even $10/mt lower deals are being discussed in the market. Taking into account rather aggressive Indian pricing, China has continued losing its competitiveness in Vietnam with $795-800/mt CFR offers for SAE1006 being on the table.
- Chinese HRC has been losing its competitiveness lately in comparison to India. Export offers for boron-added SS400 HRC given by major Chinese mills are at $780-800/mt FOB for February shipment, with a midpoint at $790/mt FOB, moving sideways compared to last week. The tradable level is $760-765/mt FOB from a number of traders and smaller mills, but still the interest in purchases has been relatively low, at least in Asia. Domestic HRC prices in China have been fluctuating in the limited range, showing just RMB 5/mt decline compared to last Friday. Following futures losses earlier in the week, they have posted rebound today on December 24, which also slowed down export activity.
