Global View on HRC: Bearish Asia spreads negative mood, no improvement in other regions

Friday, 28 June 2024 15:20:27 (GMT+3)   |   Istanbul
       

Sentiments have remained rather negative in Asia this week, with another drop seen in ex-China HRC prices affecting other markets in the region, including Vietnam where deal prices for import HRC have dropped by at least $10-15/mt week on week. At the same time, ex-India HRC prices have been stable, but most Indian mills have stopped submitting offers due to tighter competition. Prices for HRC in Turkey have weakened in all segments after the recent holiday in the country. Local HRC prices in EU are stable, though with some downward bias in a number of offers, while imports have been impacted by the new safeguard measures.

Given the lack of support from the domestic market and the continuous declines in HRC futures prices, another downward correction in HRC export prices has been seen in China this week. Export offers for boron-added SS400 HRC given by major Chinese mills have settled at $520-530/mt FOB, with a midpoint at $525/mt FOB, down by $5/mt week on week, while smaller mills have reduced their offers to $510-520/mt FOB.  However, despite the drop in prices, trade activity has been rather moderate, while most buyers have been bidding at lower levels. Tradable prices for SS400 HRC have dropped to $505-515/mt FOB, versus $515-525/mt FOB last week, where the lower end of the range corresponds to deal prices in Vietnam and India, while the higher end corresponds to offers in the Middle East.  Domestic HRC prices in China are at RMB 3,750-3,840/mt ($516-529/mt) ex-warehouse on June 28, with the average price level RMB 60/mt ($8/mt) lower compared to that recorded on June 21, according to SteelOrbis’ data.

Ex-India HRC prices have been kept stable at $560-610/mt FOB in the past week, but large mills have stopped submitting offers faced with the fall in ex-China prices in key destination like the Middle East, while, even though sentiments have improved slightly in Europe following the extension of safeguard duties, this has not been sufficient to trigger interest in imports. According to sources, only a few deals for Indian HRC are reported to have been done in the Gulf region at around $598/mt CFR, which translates to around $560/mt FOB. At the same time, sources said that the market estimates workable prices for Indian HRC at $570-590/mt CFR, depending on the destination, which means Indian mills need to decrease their prices by more than $20/mt. Meanwhile, no firm offers for ex-India HRC have been heard in the UAE this week, where Chinese suppliers have decreased their prices by at least $10/mt week on week to $550-565/mt CFR.

This week started with another decrease in HRC prices from Chinese suppliers to Vietnam, with offers for ex-China SS400/Q235 falling by around $12-15/mt since the beginning of last week, while workable prices have been at $516/mt CFR in a number of fresh deals. At the same time, offers for re-rolling SEA1006 HRC have dropped as well, by at least $5/mt, while tradable prices have dropped to below $540/mt CFR, according to sources. More specifically, ex-China Q235/SS400 HRC offers have settled at $518-520/mt CFR Vietnam, against deals at $525-527/mt CFR at the end of last week and versus offers at 4530-535/mt CFR at the beginning of last week. Besides, according to sources, this week several deals have already been reported at $516-518/mt CFR levels in Vietnam. Meanwhile, around 40,000 mt of Chinese SAE1006 HRC were sold in Vietnam at $540-545/mt CFR last week, versus $545/mt CFR reported earlier. At the same time, most offers have been voiced at mainly the same level this week, though market insiders have been estimating the new tradable prices at $535/mt CFR for the next round of purchases. Thus, the SteelOrbis reference price for imported SAE1006 HRC in Vietnam, based mainly on ex-China offers, has come to $535-540/mt CFR on June 28, compared to $545/mt CFR last week.

Local demand and trade for HRC have remained sluggish in Europe, heading also into the summer holidays, with local prices from European mills both in Italy and northern Europe remaining relatively unchanged compared to last week, standing at €640-650/mt ex-works for mainly August delivery, though the tradable prices in both regions have been estimated at €625-630/mt ex-works, against €630-640/mt ex-works last week. Meanwhile, European importers have been preparing for the start of the period for the new safeguard import quota rules on July 1. According to sources, more buyers will be looking for alternatives like Indonesia and Saudi Arabia, though prices remain an issue as currently local HRC is more competitive. Specifically, offers for ex-Indonesia and ex-Saudi Arabia HRC have been voiced at around €640-645/mt CFR southern Europe, at least €10-15/mt higher than the workable prices for local materials. Indicative offers for ex-Asia HRC have been estimated at around €610/mt CFR, mainly the same as last week, though no new deals have been reported so far. Offers for ex-India HRC have been heard at €620/mt CFR, while offers for ex-Turkey HRC have been at around €630-640/mt CFR, including duty, the same as last week.

The Turkish HRC market has not recovered after its recent holiday: on the contrary, prices have declined under pressure from weak demand for flats both locally and abroad and lower ex-China offer prices. Even climbing scrap prices have not helped provide support for a rebound in HRC prices. As a result, in the Turkish domestic market, HRC prices have settled at $590-600/mt ex-works levels, while earlier levels $10-15/mt higher had been available. However, according to the mills, local customers are looking for $570-580/mt ex-works, but there is some resistance from the suppliers’ side. As for exports, the realistic offers have declined to $580-600/mt FOB, from the earlier voiced $595-610/mt FOB. While some deals have been closed within the mentioned range for small and medium tonnages, large European buyers seem to be insisting on $560-570/mt FOB Turkey. Import offers from China dropped by $10/mt compared to before the holiday to $550-555/mt CFR due to low iron ore prices. However, prices have since rebounded slightly to $553-557/mt CFR, with no deals reported. However, some transactions may be heard shortly since some negotiations are underway and it has been a while since serious restocking activity was observed.

In the UAE, even though there has been some softening in HRC import prices, particularly from India and China, Emirati purchasers have been hesitating to replenish stocks due to the continuing low demand domestically. According to reports, Chinese suppliers have reduced SS400 prices by $5-10/mt to $550-565/mt CFR for August shipment compared to last week. Similarly, Indian suppliers have lowered their HRC offers to the GCC to $570-590/mt CFR, versus $600-620/mt CFR in previous weeks. However, market players report that Indian suppliers are now not supplying to the UAE due to the slow trade. Meanwhile, Japanese suppliers have continued to offer, but less aggressively after they sold several lots to the UAE. Their offers are now made at $550/mt FOB, compared to $570-575/mt CFR to the UAE in previous weeks.


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