Global View on HRC: Most suppliers still target higher prices, mood worsens in Asia on China’s slump

Friday, 02 February 2024 16:20:30 (GMT+3)   |   Istanbul
       

Despite Chinese government’s attempts to stimulate growth, and traditional revival of trade ahead of the Lunar New Year holiday favouring price hikes, Chinese suppliers have been rather pessimistic this week, putting the global hot rolled coil (HRC) market and especially Asia under negative pressure with local HRC prices dropping in Vietnam. However, Turkish producers are feeling less pressure at least for now, as well as HRC producers in Europe, targeting higher HRC prices, though insufficient demand remains as issue restraining significant uptrend. Meanwhile, Indian suppliers have remained active this week, boosting sales mainly to the Middle East, to the UAE in particular, where buyers have kept restocking on strong domestic market.

Chinese HRC exporters have not been in a hurry to increase their offers for overseas buyers even though domestic prices have been showing a slight upward movement at the beginning of the week. Trade activity has remained moderate, with most deals heard through traders mainly to the Middle East and Asia, while buyers in other destinations have been more cautious in terms of purchases. Export offers for boron-added SS400 HRC from most large Chinese mills have settled at $580-590/mt FOB, mainly for March shipment, the same as last week. However, a few offers from mills, such as from Benxi Steel, are still voiced at as high as $600/mt FOB. At the same time, by the end of the week, offers from smaller mills and traders for SS400 HRC have been heard at $560-570/mt FOB, down $5/mt since the beginning of the week. At the same time, although local HRC prices have been showing some rises at the beginning of this week, by Friday, February 2, domestic HRC prices in China have settled at RMB 4,050-4,200/mt ($570-592/mt) ex-warehouse, with the average price level RMB 65/mt ($9/mt) lower compared to that recorded on January 26, according to SteelOrbis’ data. The overall expectations for the post-holiday period are rather mixed, and some are even pessimistic as outputs of HRC have indicated increases, while in February widespread snowy and rainy weather may continue to hit China.

Trade activity has been very limited in Vietnam’s HRC import market as many Chinese sellers have started to leave the market ahead of the Lunar New Year holiday. Besides, Vietnamese HRC producer Hoa Phat Group has announced its new prices for HRC deliveries in April and May, decreasing them by around $27-30/mt over the past month to $610-615/mt CIF. The decision to decrease prices has been expected as most traders have started to lose confidence, seeing the weakening of the Chinese market ahead of the long Lunar New Year holiday. The latest offers for ex-China SS400 HRC have been estimated at $565/mt CFR, against $565-570/mt CFR last week, while, although most ex-China SAE1006 HRC offers have been maintained at $605/mt CFR, against $605-610/mt CFR last week, Vietnamese buyers’ bids have been voiced at below $600/mt CFR. In the meantime, Indian suppliers have been more active in Vietnam this week, with a deal for around 30,000 mt of SAE1006 HRC reported to have been signed at $605/mt CFR Vietnam for February shipment. Thus, the SteelOrbis reference price for import SAE1006 HRC has rolled back to $600-605/mt CFR, against $600/mt CFR.

This week price range has widened for India HRC exports with prices have showed a mixed trend considering that sellers have kept adopting a dual pricing strategy to cope with competition with Chinese sellers in Asia and the Middle East, while maintaining higher price levels in Europe. Ex-India HRC offers have settled in a wide range of $585-670/mt FOB, versus $605-650/mt FOB last week, with the lower end of the range corresponding to deal prices in Vietnam. In particular, according to sources, an Indian mill has reportedly sold around 30,000 mt of SAE1006 HRC at $605/mt CFR Vietnam for February shipment. Besides, more deals have been reported for ex-India HRC in the Middle East, with a trade for 8,000 mt for delivery to the UAE at $635-640/mt CFR for February shipment, while another deal for around 20,000 mt has been signed at $640/mt CFR UAE for February shipment as well, which translates to around $610/mt FOB. Meanwhile, ex-India HRC offers have already been voiced at $730/mt CFR Europe, which translates to around $670-680/mt FOB, and although the price is competitive as compared to local offers few buyers are ready to take the risk given the quota issue.

In the UAE, since the local market's demand has steadily improved, the import segment has been more active. As a result, this week's ex-China offers for SS400 grade remained unchanged from the previous week, at $590-600/mt CFR to the UAE for March shipping. However, some Chinese suppliers have offered higher-than-workable prices of about $610-620/mt CFR, and they sold around 15,000 mt of SS400 to the UAE this week at $615-620/mt CFR. SAE1006 offers, on the other hand, remain at $620/mt CFR, the same as the week before. Additionally, Emirati purchasers bought two different lots from India for February shipment, with an overall approximate quantity of 8,000 mt and 20,000 mt at $635-640/mt CFR and $640/mt CFR, respectively. The current offers from Indian suppliers have been fixed at $635-645/mt CFR. On the other side, South Korean suppliers who had been withholding offers returned to the market and offered $670/mt CFR to UAE.

HRC pricing in Turkey has been showing some slight optimism since the mills have been trying to increase their offer levels, based on the earlier concluded export sales, almost fulfilled portfolios for March production and lack of harsh competition with the import offers. As a result, most of the local HRC offers in Turkey are at $720-730/mt ex-works for end of March and April production, $10-20/mt up over the week. The domestic buyers still believe lower levels should be possible for decent orders, based on the generally insufficient demand coming from the end user side. On exports, the indicative offers are at $695-710/mt FOB, mainly for April shipments. In the import segment, ex-China HRC offers have continued to move in a narrow range and this week the material has been available at $605-610/mt CFR in most of the offers for Q195 3 mm and up material. Indian offers have been mainly reported at $650-655/mt CFR with some slight discounts considered possible, but no deals have been concluded due to high price level. In the meantime, in the coated segment the prices in Turkey’s domestic market have been relatively stable for a couple of weeks now but most of the re-rollers admit the official offers are not workable and at least $10-20/mt discounts might be applicable according to the incoming demand.

Prices from European HRC suppliers have remained relatively stable though still with some upward bias reported both in northern and southern Europe despite sluggish trade activity. Specifically, large manufacturers in northern Europe have continued to aim for €800/mt ex-works and even €820/mt ex-works for their HRC for April deliveries, the same as last week. However, while these offers are still considered unworkable, with only some exceptional transactions reported at €800/mt, most mills have been offering their materials at €760-780/mt ex-works, against €760-770/mt ex-works last week. Offers from major Italian mills for delivery in March have settled at €765-770/mt ex-works, against €760/mt ex-works last week. However, the tradable prices have been estimated at €750-760/mt ex-works, up by €5-10/mt week on week. Meanwhile, import trade activity has been limited this week, with most offers unchanged at €665-715/mt CFR level. Offers from Asian suppliers have been voiced at €665-680/mt CFR, while offers for ex-India HRC have settled at €690/mt CFR, up by €10/mt week on week. Furthermore, following several deals for ex-Turkey HRC, this week offers from Turkey have been estimated at €715/mt CFR, including duty, though, according to some market insiders, “€700/mt CFR could be still reached”.


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