Global View on HRC: Global market unstable amid fluctuations in China

Friday, 19 July 2024 13:14:28 (GMT+3)   |   Istanbul
       

The third week of July has turned out to be somewhat turbulent in terms of hot rolled coil (HRC) prices coming from China to many regions, with some recovery heard at the beginning of the week and then with prices softening to lower levels by the end of the week amid the decline seen in futures prices in China. At the same time, trade activity has been moderate globally, with several deals reported to have been signed for ex-China HRC with slight discounts in the Middle East, while Asian suppliers, from Vietnam and Japan in particular, have managed to sell sizable volumes to India. The market situation in Europe has not changed much over the past week, with only some import HRC prices showing slight decreases.

At the beginning of this week, some hopes of a recovery appeared among Chinese HRC exporters given the better mood locally amid expectations for the introduction of stimulus measures at the meeting in Beijing of China’s top leaders. However, by the end of the week, another slump has been reported in Chinese futures prices, making most market insiders pessimistic again. Export offers for boron-added SS400 HRC from large Chinese mills have settled at $515-520/mt FOB, with the midpoint at $517.5/mt FOB, the same as at the beginning of last week and up by $2.5/mt since the end of last week. At the same time, smaller mills have been offering their materials at $510-515/mt FOB, compared to $510/mt FOB and slightly lower at the end of last week. However, by the end of the week, although most offers from mills have remained relatively stable, the tradable prices for HRC SS400 have been estimated at around $505-510/mt FOB, against $507-515/mt FOB at the beginning of the week and versus $505-515/mt FOB last week.

Ex-India HRC prices have settled at $560-600/mt FOB, against $560-610/mt FOB last week, with the higher end of the range corresponding to offers to Europe at around $650-655/mt CFR, down by $5-10/mt week on week. At the same time, according to sources, following a trade for 3,000 mt by an eastern India-based integrated mill at $660/mt CFR Antwerp, another deal for 5,000 mt has been signed at $650/mt CFR. According to sources, compared to other markets, Europe is still attractive for Indian mills, but it is difficult to assess how many offers are converted to confirmed deals because sellers are reluctant to disclose prices net of discounts, as there is strong competition. In contrast, Middle East discounting trends are unviable for Indian mills.

In Vietnam’s HRC import market following the price declines seen in the previous week, at the beginning of the past week some recovery in prices was seen, but prices have dropped again by the end of the week, amid fluctuations in offers from Chinese suppliers. Specifically, offers for ex-China SS400/Q235 HRC in Vietnam have been voiced at $520/mt CFR for August shipment, versus $516-518/mt CFR last week. Furthermore, the SteelOrbis reference price for SAE1006 HRC has been heard at $530-540/mt CFR, the same as last week. Meanwhile, according to sources, cheap non-VAT offers for HRC have disappeared from the market again as inspections of exports have resumed.

At the same time, while import trade has been rather limited due to slow demand, the Vietnamese HRC producer has been focusing on expanding its export sales, with at least 100,000 mt of HRC reported to have been sold to India at $560-565/mt CFR, against deal prices at $580-583/mt CFR reported last month. 

The situation has remained broadly stable in the European HRC market in the past week. Italian HRC producers’ offers are mostly at €630-640/mt ex-works for August-September delivery, the same as last week, while the tradable level is still estimated at €620/mt ex-works, with a number of transactions reported at the above levels this week. Meanwhile, producers in northern Europe have been offering their materials for August-September delivery at €630-650/mt ex-works. Still, levels of €620-630/mt ex-works are considered more realistic and achievable, according to sources. At the same time, in the import segment, the number of firm import offers has been limited, with most offers heard at mainly the same levels as last week. Most offers for ex-Asia HRC have been voiced at €585-600/mt CFR, down by €5/mt week on week, with the lower end of the range corresponding to ex-Taiwan HRC offers, while offers from Indonesia and India have been reported at €600/mt CFR, mainly the same as last week. At the same time, while European customers are unable to book HRC from the traditional “other countries” sources due to the safeguard issue, talk about a deal for ex-Australia HRC signed at €580-585/mt CFR has been circulating in the market.

In Turkey, HRC prices have remained relatively stable in the domestic market at $580-590/mt ex-works base for end-of-August and September deliveries, while large and medium buyers still believe that levels of $570-575/mt ex-works are reachable. As regards exports, the workable price level is assessed at $570-580/mt FOB and a total of 15,000 mt has been sold to Ukraine and the UK lately at the upper end of the range. At the same time, the lower end is mainly available for orders for decent tonnages for the southern European market. In Turkey’s import HRC segment, there are still only offers from China. In the past week, prices first increased by around $5/mt to $555/mt CFR and above for September shipments, but by the end of the week offers have rolled back to $545-550/mt CFR levels. Still, it seems there are no takers at these levels among Turkish re-rolling companies given their slow cold rolled and coated steel sales.

In the UAE, there has been some silence in the HRC market this week as Emirati purchasers had recently bought several lots of HRC. However, with China continuing to offer affordable HRC prices and new low offers from Japan, HRC import activities are foreseen to improve in the coming weeks. Because of the lack of fresh deals after Emirati buyers purchased approximately 60,000 mt of HRC at $550-555/mt CFR last week, Chinese suppliers have continued to offer SS400 grade at $550-560/mt CFR UAE for August shipment. Additionally, reports claim that China has offered Q235 grade to the GCC this week at $550-555/mt CFR. Meanwhile, Japanese suppliers that had withdrawn offers have begun to offer HRC to the UAE at $555/mt CFR, down from $570-575/mt CFR before. Despite modest improvements in trading activity, suppliers in South Korea and India are still not providing offers and prefer their domestic markets.


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