In the first week of the year, the global hot rolled coil (HRC) market has continued to witness cautious signs of optimism, driven mainly by the recovery of ex-China HRC futures prices, which has resulted in more price hikes in new deals and offers not only from Chinese but also from other Asian suppliers, like Vietnam. At the same time, suppliers in India have unexpectedly resumed HRC exports to the Middle East after months of total silence. Meanwhile, no business activity has been reported in the EU as most market players there have yet to return from the Christmas and New Year holidays.
Most Chinese suppliers have continued to maintain their offers unchanged over the past week. At the same time, while at the beginning of this week several mills decided to correct their offers down slightly as business activity has remained slow globally due to the winter holidays, by the end of the week offers for boron-added SS400 HRC given by major Chinese mills have increased prices to last week’s levels at $585-595/mt FOB for late February and March shipment, against $580-590/mt FOB at the beginning of the week. Meanwhile, the tradable level for ex-China SS400 HRC has been assessed at $565-580/mt FOB, the same as last week, with the lower end of the range corresponding to ex-China offers in Vietnam at around $580-585/mt CFR, while the higher end corresponds to offers in the Middle East and Turkey at $610-618/mt CFR.
This week, Vietnamese producer Hoa Phat Group announced its new local prices for HRC for shipment in March and April on January 2, hiking them by around $37-38/mt month on month to VND 15,600-15,630/mkg ($641-642/mt) CIF. Although the new prices of the company have followed the market expectations amid higher import offers for HRC in Vietnam, for ex-China material in particular, many market insiders emphasized that the new levels are “too high so far to be accepted by the market”. At the same time, most ex-China SS400 HRC prices have been voiced at $580-585/mt CFR Vietnam, the same as last week, while a few deals for around 5,000 mt of ex-China Q195 HRC have been reported at $575-577/mt CFR this week. The tradable level for ex-China SAE1006 HRC has been estimated at around $600-610/mt CFR for end-of-February shipment, while offers from Chinese first-tier mills have been estimated at $615-620/mt CFR for mainly March shipment.
Indian mills have resumed their offers to the Middle East, resulting in several deals at discounts to this destination this week. Specifically, according to sources, around 20,000 mt in total of ex-India SAE1006 HRC are reported to have been booked to the UAE and Oman at $635/mt CFR for end-of-January shipment. Meanwhile, according to sources, this order was booked with an additional discount as most ex-India HRC offers for SAE1006 HRC have been voiced at $640-645/mt CFR Middle East, which translates to around $610-615/mt FOB. At the same time, no deals have been voiced to the main trade destination for Indian sellers, to Europe, due to the absence of most buyers amid the winter holidays. The indicative offers for ex-India HRC have been estimated at $660-670/mt FOB, the same as before the holidays. Thus, offers for ex-India HRC have settled at $610-670/mt FOB, against $620-660/mt FOB last week.
In Turkey, HRC prices have not moved much over the week since there has not been a lot of business activity due to the holiday period. In addition, while a week ago the downward expectations in the import scrap segment were strong, lately the mood has changed and now no drastic price decline is expected. As a result, local mills, which are offering for February-March production, feel quite comfortable remaining at $700-720/mt ex-works, while export offers have been ranging at $680-700/mt FOB. EU customers have been silent this week due to the holidays and they are expected to resume inquiries by mid-January. In the import segment, Chinese offers have been set at $615-617/mt CFR this week for Q195 quality mainly for February shipments. There has been talk about a sale of up to 10,000 mt to Turkey at $625/mt CFR but for at least 150-day payment. In addition, Egypt seems to have sold IF grade HRC to a Turkish re-roller, but the price has not been disclosed for now. The recent FOB base price levels from Egypt have been at around $690/mt.
In the GCC, trading activity began to pick up and this week several GCC buyers expressed interest in Indian HRC material, which is at the upper end compared to what the market is currently offering. As a consequence, India has lately sold 20,000 mt of HRC to several GCC countries, for end-of-January shipment, at approximately $635/mt CFR. While the majority of Indian mills are still mute on offers, certain Indian suppliers are still offering at approximately $635-640/mt CFR to the GCC. China, which has the lowest offers in the market, has maintained its SS400 offers from the previous week at $600-620/mt CFR, for February shipment, to the UAE. Similarly, stability has been observed for the other grade of HRC, SAE1006, at $620-640/mt CFR for February shipment to the UAE. In the meantime, South Korean suppliers have chosen to withdraw their offers due to the failure to achieve the desired higher prices and the lack of interest from GCC buyers.
In Europe, the HRC price range has remained stable during the holiday period, while most EU market players are yet to come back from the Christmas and New Year holidays. Official offers from European mills have been estimated at €700-750/mt ex-works for February-March delivery, the same as before the holidays, with the lower end of the range corresponding to offers in Italy at €700-710/mt ex-works, while official offers in the northern part of the EU have been estimated at €720-750/mt ex-works, depending on the supplier. According to sources, there is no trade as both sellers and buyers are still on holiday and more clarity will be seen next week when all return to work. Besides, although sentiments among producers are still bullish, slow demand will remain an issue. Meanwhile, considering the absence of buyers during the holidays, import activities have remained subdued, with the indicative prices are estimated at €650-685/mt CFR, the same as last week.