Turkish buyers have continued to show interest in import hot rolled coil (HRC) offers as they are much lower than domestic prices. Local mills in Turkey continue to keep their prices high since sales at the levels demanded by buyers would entail huge losses for them. As a result, the main activity nowadays is seen in the import market, while domestic production is foreseen to be cut in November.
Domestic HRC prices in Turkey are still at $680-710/mt ex-works, while export offers, according to traders, are now at $670-700/mt FOB. Turkey’s prices are not workable in either the local or export markets, taking into account low demand, the downward trend and the aggressive offers coming from Asia.
According to sources, an ex-China HRC cargo was booked by a re-roller at $590/mt CFR for re-rolling grade, while the new offers for Q195 quality are at $580-585/mt CFR, down $5-10/mt since earlier this week. Indonesia decreased HRC offers to Turkey by $55/mt over the past week and is trying to sell at $605/mt CFR. The information regarding prices from Japan is controversial: some buyers report they received $610-630/mt CFR, in line with some offers from India. In the meantime, there is talk about negotiations with Japan at below $600/mt CFR. As for South Korea, there is an information about a $590/mt CFR booking to a re-roller, but the market players mainly believe it was accepted by the supplier in order to average out earlier-closed $620-625/mt bookings. In addition, Vietnam and Taiwan are in the market with $605/mt CFR and $610/mt CFR offers, respectively.
As a result, China’s $580-585/mt CFR price levels are the lowest in the market in Turkey today, putting pressure on other suppliers, but mostly on local mills. “The difference between local and import HRC in Turkey is huge, but selling at $600-630/mt ex-works for Turkish mills is a huge loss, so it will be cheaper for them to drop production,” a trader told SteelOrbis. Some players expect the capacity utilization rates for HRC in November will decrease to around 65-75 percent from the current 80-85 percent.
Moreover, cheap Asian and particularly Chinese HRC make import slab purchases less reasonable. The latest offers from Russia have been reported at $500-505/mt CFR, while South Korea and India have offered at $550/mt CFR.
