Hot-rolled coil (HRC) market players in the EU, the CIS and Turkey are already in holiday mood and have been trying to assess the possible price trend for January and February. In the meantime, the price situation in Asia has considerably weakened for HRC with even more aggressive prices seen from Asia, and also given the softer Chinese market.
In Europe, business activity for HRC has been stalled since the end of the last week due to the holiday period. The mood has been generally pessimistic since trade has been hit by increased costs and lower end-user demand over the past few months. On average, local HRC prices dropped by €80/mt in December. In addition, from January 1, the import volumes waiting now at EU borders will be customs-cleared and the available quota for the next period will be known. Also, there are still some hopes for exports from Europe to the US in the new quarter.
CIS-based HRC exporters have also been inactive this week and mostly plan to stay away from lively business activity until January 10. The mills will return to sell for February production and March shipments, and their allocation is not yet clear. In the previous round of sales, MMK hardly gave any decent volume for export, while the supplier might provide larger lots in this round of sales.
In Turkey, workable prices for HRC have weakened over the past week to around $820-840/mt ex-works, with even lower levels heard. However, some mills are still insisting on higher official indications. While there are no solid offers from the CIS, Turkish mills are not in a rush to provide big discounts. In addition, the lira has stabilized somewhat recently. However, aggressive offers from India have been putting pressure on prices in the region. Last week, around 20,000 mt were sold at $800-805/mt CFR, while this week ex-India offers at $780-790/mt CFR have been voiced. Moreover, 10,000 mt of HRC from India were booked to Egypt at $810/mt CFR. In the UAE, an ex-India cargo was booked at $780/mt CFR.
India-based mills have been aggressive not only in distant markets, but in Asia too. Falling local HRC prices in India and rising stocks have forced them to slash export prices by $20/mt over the past week to $710-740/mt FOB. Specifically, in Vietnam the actual deal prices for HRC from India fell to $755/mt CFR for SAE 1006 this week, versus $760-770/mt CFR seen last week. Bids for HRC of the same origin have been reported at levels $5/mt lower compared to the latest deal. Given such aggressive prices from India, other Asian HRC suppliers to Vietnam have no chance of selling now. South Korea and Japan indicate not lower than $830/mt CFR. China is also not competitive with $790/mt CFR for SAE1006, although the recent local market weakening there may lead to lower export offers in January.
This week, HRC export prices from China have settled at $780/mt FOB on average, edging down by $10/mt. The tradable level is estimated at $760/mt FOB but business has been very slow, specifically due to the aggressive price policies of the Indian mills. HRC futures at Shanghai Futures Exchange have closed at RMB 4,411/mt ($691/mt) on December 30, down by RMB 28/mt ($4/mt) on the day and down RMB 173/mt ($27/mt) over the past week.
