The mood and the price trends for hot-rolled coil (HRC) in most regions globally have been demonstrating a certain pessimism. In Turkey, buyers have managed to insist on sizeable discounts in the import segment given the tightened competition, while the overall market situation in Asian markets has remained negative with prices going down due to the aggressive policies of traders going short. China has been giving mixed signals at the end of the week, bringing contrasting expectations to the market. In the meantime, the European market has remained stable in terms of domestic prices, with bullish sentiment prevailing, mainly given the EU-US Section 232 agreement and its expected results.
- CIS-based HRC exporters have more or less completed their sales for December production and are expected to take their time to announce offers for the next round of sales. The latest deals for HRC to be shipped from the Black Sea/Azov Sea area for December were closed at a $10-40/mt discount, specifically to Turkey. Russia sold at $900/mt CFR while Ukraine traded at $860-870/mt CFR with the average freight estimated at $35/mt. In the meantime, in the Baltic region, Russia’s Severstal closed December at $900-930/mt FOB for small coils and at $960-1,000/mt FOB for big coils. As a result, the company decreased prices by $10-20/mt from the initial offers for December production. The total export allocation sold from Russia for December is reported at around 340,000-350,000 mt, while for Ukraine it is around 70,000-80,000 mt.
- The abovementioned ex-CIS HRC sales to Turkey have been affected by increased competition. For example, there have deals from Brazil at below $900/mt CFR levels. Another issue is that there have been a lot of discussions regarding aggressive deals and offers from China in the range of $840-855/mt CFR. By the end of the week, the lowest level for ex-China HRC has been heard at $820/mt CFR for end-of-February shipments. Such a situation has naturally put pressure on prices from the CIS and the mills have chosen to sell at a discount. However, domestic HRC producers in Turkey have been trying to maintain their prices at $920-930/mt ex-works in their official offers, although buyers’ price idea is closer to $900-905/mt ex-works. The sentiment is generally negative and has been weighing on prices for galvanized and cold-rolled steel in Turkey, bringing them significantly down over the past week.
- The general sentiment in the European HRC market has remained positive due to expectations of restocking activities by local distributors. In addition, the situation with the EU-US decision regarding Section 232 has added to the optimistic mood as the development is expected to boost exports from the EU. Higher overseas sales from the EU are foreseen to eventually lead to tighter supply in the local market which would also compensate for the currently insufficient demand from the European automotive sector. Once in place, the flats exports from Europe to the US are also expected to support prices inside the EU, but for now these have remained stable over the week, specifically in the HRC segment.
- The reference price for imported SAE1006 HRC in the Vietnamese market has dropped to $830-850/mt CFR, down by $12.5/mt on average over the past week. The highest end of the range corresponds to the contract for January shipment HRC from the big mill, while the lower end translates to traders’ prices. The aggressive policy of Chinese traders, who were offering in a short position, is contributing to the negative outlook for the future. By the end of the week, even lower offers for February shipment and beyond have been seen - $810-830/mt CFR Vietnam.
- Formosa Ha Tinh has announced re-rolling grade SAE1006 HRC (non-skin passed) prices in the local market at $880/mt CFR, down by $40/mt from the previous month. The base price for the export market has been set at $870/mt FOB. This price decline is due to the bearish Chinese market.
- Ex-China HRC offers for SS400 from mills have posted a decline by $25/mt over the week to $845-855/mt FOB, but traders, going short and offering material for shipment after January, have been ready to sell at even below $800/mt FOB. For instance, deals for position SS4000 coils were done at $810/mt CFR and then $795-800/mt CFR to Vietnam. Average local HRC prices have decreased by RMB 165/mt ($26/mt) over the week, according to SteelOrbis’ information. The trading in the local market has been weak, especially late this week as, after the sharp rise in futures prices in China on Thursday, they have resumed their declining trend on Friday.
