Global View on HRC: Import trade improves in Turkey and EU, mood remains optimistic

Friday, 08 December 2023 16:14:35 (GMT+3)   |   Istanbul
       

This week, more offers have resulted in transactions as Asian hot rolled coil (HRC) suppliers have remained focused on offers and sales to Europe and Turkey rather than on dealing with buyers from their own region. The reason is still the high pricing set by EU mills recently and maintained by Turkish producers this week. In particular, China remains the most active supplier in the Turkish market, with its offers minimizing the presence of other foreign suppliers, while Indian exporters have been increasing sales to Europe, alongside producers from Egypt and Turkey.

In Europe, as expected, producers have continued to raise HRC offers this week, with official offers from Italian mills voiced at around €700/mt ex-works on average for February delivery, versus €660-670/mt ex-works last week, though the tradable level has been estimated in Italy at around €660-665/mt ex-works for January delivery and at €670/mt ex-works for delivery in February. In northern Europe, although several deals have been reported at €670-680/mt ex-works, mainly the same as last week, most mills have increased their prices to €720/mt ex-works, as had been expected last week. As for imports, most offers have remained at €630-660/mt CFR, the same as last week, with most ex-Asia HRC offers, including those from Japan, Vietnam, South Korea and Taiwan at €630-650/mt CFR. Meanwhile, a deal for around 5,000 mt of ex-Turkey HRC has been reported this week at around €660/mt CFR, including duty. Besides, two more deals for 20,000 mt and 10,000 mt of ex-Egypt HRC are reported to have been done to Europe at around €640/mt CFR. Furthermore, more ex-India HRC deals have been also confirmed at €640/mt CFR southern Europe during the past two weeks.

The rapid price increase for import scrap in Turkey and rising import slab offer levels have together pushed up local HRC prices from $650-670/mt ex-works earlier to $700/mt ex-works and above by the end of the current week. The offers are mainly for February deliveries in the domestic market. Despite the price increase, the latest workable prices still seem to be at $680/mt ex-works levels since customers have accepted the uptrend, though buying is cautious. The low prices from China, as expected, still act as an anchor to the bullish mood of the Turkish mills. In the past week, a total of 95,000 mt of Chinese HRC have been booked to Turkey at around $602-605/mt CFR for Q195 quality and at $615-618/mt CFR for SAE1006. Part of the tonnage was sold to a pipe producer for some specific sizes and steel grades. The latest offers from China are still at around $610-617/mt CFR for January shipments, with no further bookings reported. No other firm import offers are heard for alternative origins, though Egypt is expected to announce around $690/mt CFR, in line with its most recent sales to southern Europe for large HRC tonnages. As for Turkey’s exports, there have been some deals for small lots and closer lead times to Italy, Greece, and Ukraine at $650-665/mt FOB base, while the latest targets are at $660-670/mt FOB, which is much lower than the domestic Turkish indications.

At the beginning of the week, as HRC futures prices were moving down in China, the tradable price levels softened slightly, with some Chinese traders trying to sell in short positions and decreasing their prices. However, by the middle of the week the mood has improved, while the downtrend in workable prices for SS400 HRC reversed, with prices reaching $560-570/mt FOB, against $550-560/mt CFR last week, and $550/mt FOB at the beginning of the week. Meanwhile, export offers for boron-added SS400 HRC from major Chinese mills have settled at $575-580/mt FOB, for January and also February shipments, with the midpoint at $577.5/mt FOB, up by $2.5/mt on average over the past week. At the same time, while ex-China trade in Vietnam has remained moderate, with most offers for SS400 and Q195 HRC reported at $570/mt CFR and $575/mt CFR, respectively, Chinese suppliers have managed to sell large tonnages up to at least 80,000-100,000 mt in Turkey. In particular, around half of the tonnage was sold as Q195 HRC at around $560-565/mt FOB, and another part was sold as SAE1006 HRC with some size extras, at around $615-620/mt CFR or $575-585/mt FOB, for January shipment.

This week, Indian HRC mills have definitively pulled back all offers below the $600/mt FOB mark, expecting deals to fall in place eventually in the coming months. Thus, ex-India HRC offers have settled at $600-660/mt FOB, up by $10/mt week on week, with the higher end of the range corresponding to increased offers in Europe. At the same time, although ex-India HRC offers have been increasing in Europe, market insiders reported at least 100,000 mt of HRC sold in Europe over the past three weeks at $690/mt CFR on average, or at around $640/mt FOB.

In Vietnam, trade activity in the HRC import segment has remained rather moderate given the mounting uncertainty over the future price trend due to fluctuations in Chinese futures prices during the past week. More specifically, at the beginning of the week, most prices available for ex-China position SAE1006 HRC settled at $575/mt CFR, compared to $575-580/mt CFR last week, with bids standing at around $573/mt CFR. However, by Thursday, market insiders reported most ex-China SAE1006 HRC offers at levels of $595/mt CFR and above, depending on the supplier. However, most Vietnamese customers have estimated the tradable price levels at around $580-585/mt CFR, with the SteelOrbis reference price established at this level so far given the absence of new deals in the market. At the same time, at the beginning of the week, a few deals for around 5,000-10,000 mt of ex-China Q195 HRC were reported at $555/mt CFR for January shipment, down by $5/mt week on week. However, by the end of the week, most offers for ex-China Q195 have been heard at as high as $570/mt CFR, while SS400 HRC offers have been estimated at $575/mt CFR and above, against $560-565/mt CFR last week.

In the UAE, since Chinese HRC offers have been performing against the trend observed in futures prices in China, Emirati buyers have kept their silence as regards imports. According to Chinese suppliers, considering that trade particularly for exports has remained solid, there is no reason to cut back HRC prices. Emirati purchasers, on the other hand, have postponed their bookings in anticipation that offers will soften in the coming weeks. As a result, this week's ex-China January shipment SS400 offers have risen by $10/mt to $590–610/mt CFR to the UAE. Similarly, in the SAE1006 grade, offers have been heard at $610-620/mt CFR, up from $610/mt CFR the previous week. Meanwhile, ex-Japan and ex-South Korea have chosen to discontinue their offers to the UAE due to insufficient bookings and demand from Emirati customers. As SteelOrbis stated last week, ex-Japan and ex-South Korea offers were $620-630/mt CFR and $655/mt CFR, respectively.


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