The hot-rolled coil (HRC) market in Turkey has failed to improve after the holiday and, although the local mills are still standing at the previous level of offers, most probably they will have to provide discounts. The key reason is the recent collapse in China, which has significantly affected the market mood and expectations. As a result, Turkey has started to receive lower offers from Asia, which pushed Russian mills to offer aggressive levels in order to sell. The situation is foreseen to eventually affect the domestic prices of Turkish mills.
The import HRC offers to Turkey have collapsed to far below $700/mt CFR, which was a valid level during the holiday period. Currently, Russian mills are offering at $630-650/mt CFR depending on the supplier, while earlier it was stated there were small sales at above $700/mt CFR. In the meantime, in the Egyptian market the Russians are aiming to sell at higher levels, at $670-680/mt CFR and even slightly above.
India is the next closest one, offering $650/mt CFR Turkey, down from around $670/mt CFR seen before the holiday. In terms of China, which is actually one of the key reasons for the weak prices, the level of offers is not that clear. Some of the sources report the traders are offering at $580-590/mt CFR, but most probably those offers are coming from companies going short. “It is not possible, at least just yet, to get these levels as per FOB from Chinese mills. Maybe $560/mt is there, some receive $600/mt even, but with freight around $80/mt to Turkey these do not match the rumored CFR price,” a trader told SteelOrbis. According to other sources, HRC from China has been offered at $590-600/mt FOB on average, which is estimated at around $670-680/mt CFR.
Currently, the domestic HRC prices in Turkey are at around $700-710/mt ex-works base, which is almost in line with last week’s levels. “Nobody wants to give prices lower than that due to high production costs. Instead of giving lower than $700/mt levels, they would rather stop for maintenance,” a trader told SteelOrbis. Others state the demand is very weak and the market sentiment is very low, and so mills’ positions are not sustainable.
