Global View on HRC: Uptrend and optimistic mood continue for now in most regions

Friday, 06 January 2023 16:07:50 (GMT+3)   |   Istanbul
       

Even though business activity in most regions has been rather slow amid the winter holidays, as anticipated hot rolled coil (HRC) prices globally have maintained their upward trend and sentiment in most markets has remained largely positive. In Asia, business has been recovering given more deals for ex-China HRC signed with Vietnamese customers. Besides, in Turkey, where a rather strong rebound in the flats sector has been seen this week, Asian suppliers have increased their offers as well, though only Chinese exporters have succeeded in concluding new deals with the most attractive prices. Trade activity in India has remained limited during the holidays, and, although HRC export prices have been stable, more increases are expected in the coming weeks, with EU-based buyers returning to the market.

In the first week of the year, the Turkish market has seen a rather strong rebound in the flats sector. The suppliers have received the support of a combination of factors, such as scrap exceeding the $410/mt CFR mark, positive signals from Asian markets, and the temporary absence of Russian suppliers. This situation has urged local flats customers to gradually restock with coated and cold-rolled steel at higher price levels, thus creating room for re-rollers to make new HRC purchases. As a result, domestic HRC offers have been set at $710-720/mt ex-works minimum this week, though a majority of customers believe levels $10/mt lower are achievable. In the import segment, most Asian suppliers have increased their offers to $660-685/mt CFR minimum or have decided to stay out of the market for now. In the meantime, China has been targeting to sell large volumes to Turkey and its prices have attracted buyers since they have been the lowest ones in the market. As a result, according to sources, Turkey has booked at least 100,000 mt of ex-China HRC at $640-650/mt CFR.

In China, most HRC exporters have decided to maintain HRC export offers at high levels, and some have even gone higher, despite price fluctuations in the local and futures markets. In particular, export offers for boron-added SS400 HRC given by major Chinese mills are at $595-610/mt FOB for mainly February shipment, with a midpoint at $602.5/mt FOB, up by $7.5/mt week on week. Meanwhile, the tradable level for ex-China SS400 HRC has been assessed at $585-600/mt FOB, up by $10/mt over the past week, with the lower end of the range corresponding to deal prices to Vietnam at $595-600/mt CFR. At the same time, Chinese suppliers have managed to sell around 100,000/mt of Q125 HRC to Turkey at $640-650/mt CFR, according to sources. In the SAE1006 HRC segment, several deals for a total of around 40,000 mt of ex-China coils are reported to have been signed at $620-625/mt CFR Vietnam through traders this week. Domestic HRC prices in China are at RMB 4,050-4,190/mt ($590-611/mt) ex-warehouse on January 6, with the average price level RMB 10/mt ($1.5/mt) higher than that recorded on December 30, according to SteelOrbis’ data.

In Vietnam, HRC import prices have increased in new deals for ex-China materials this week. In particular, around 40,000/mt of ex-China SAE1006 HRC have been booked at $620-625/mt CFR for February shipment this week. This means the deal price has increased by $10-15/mt over the past week. Meanwhile, most offers for ex-China SAE1006 HRC have already been voiced at $620-635/mt CFR, versus $610-620/mt CFR last week. Furthermore, most offers for ex-China SS400 HRC have been reported at $600-610/mt CFR, up by $10/mt week on week, with only some occasional offers still heard at $595/mt CFR. At the same time, other foreign suppliers have been staying out of the Vietnamese market over the past week, with the indicative offers for both ex-Japan and ex-India SAE1006 HRC standing at not below $630/mt CFR. The reference price for SAE1006 HRC in Vietnam has moved up to $620-625/mt CFR, compared to $610-620/mt last week.

Ex-India HRC trade activity remained limited during the year-end holidays and, while the latest small-volume deals were concluded at unchanged prices, most mills were re-working pending offers at higher levels, and increasing export allocations for the last quarter of the current fiscal year, expecting significantly higher prices to be absorbed in major destinations over the coming weeks. The reference price for ex-India HRC was stable at $595-610/mt FOB early this week and was increased to $610/mt FOB. This level is indicative and may be revised shortly as soon as more firm offers are heard and new deals are done. Most local mills are holding back from concluding deals, with price realizations expected to touch at least $620-640/mt FOB in the coming weeks even with EU-based buyers remaining quiet. Moreover, new offers voiced in most destinations have already been reported at as high as $640-670/mt FOB.

Most Indian integrated steel mills have announced hikes in flat product local base prices by a range of INR 1,500-2,000/mt ($18-24/mt) for HRC for current month deliveries, according to trade and industry circles. However, the not so promising situation in the CRC segment has resulted in an increase by just INR 500-1,250/mt ($6-15/mt) for CRC. Following the base price increase, the effective listed prices of hot rolled coil (HRC) of major Indian mills have reached INR 55,750-62,250/mt ($673-679/mt) ex-works.

While most EU market players are yet to come back from the Christmas and New Year holidays, the price range for HRC in the EU market has remained stable during the holidays, standing at €650-680/mt ex-works. However, most market insiders expect new offers to reach €700/mt ex-works when mills will return from their holidays. Besides, according to Italian sources, there is talk that Italian producers may increase prices by more than €100/mt in the coming months. Meanwhile, import activities have remained subdued given the absence of buyers during the holidays. Thus, only occasional offers have been reported this week, such as for ex-India HRC at $670-680/mt CFR southern Europe (around €632-640/mt CFR), and for ex-South Korean at €640/mt CFR Italy, the same as two weeks ago.


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