Reports of inspections of steel cargoes, including HRC cargoes, for export at a number of large Chinese ports have emerged this week and market sources are widely discussing the possibility of the limitation of non-VAT trading from China in the near future. As a result, ex-China HRC offers both from mills and traders have started to show signs of a recovery, affecting business activity either in traditional markets like Vietnam or in higher-priced destinations such as Turkey and the Middle East. Other Asian suppliers, however, have not been in a hurry to follow suit, with offers from Indian HRC suppliers reported at mainly stable levels, though, with some upward bias in offers to the EU. As for Europe, the price trend has finally reversed in the region, with local mills targeting at least a €20/mt increase in new offers to domestic customers.
This week, ex-China HRC prices from mills have moved up further amid increasing local HRC prices coupled with higher prices for raw materials. Besides, higher prices from traders are also explained by the news about the Chinese customs authorities starting investigations into the non-VAT business and, though late last year rumours about the issue also existed, the situation now looks more serious. Specifically, by the end of the week, export offers for boron-added SS400 HRC from large Chinese mills have settled at $540-560/mt FOB, versus $540-550/mt FOB at the beginning of the week and up by $10/mt over the past week. Besides, most offers from smaller mills have been heard at $535-550/mt FOB, against $530-535/mt FOB last week and versus $535/mt FOB at the beginning of this week. Meanwhile, the tradable levels for ex-China SS400 HRC have been estimated at $535-545/mt FOB, versus $530-535/mt FOB reported early this week, and up by $15/mt week on week.
In India, HRC export prices have mostly remained stable, though with some slight upward bias in some offers to Europe. In particular, ex-India HRC prices have settled at $550-585/mt FOB, versus $540-570/mt FOB last week, with the higher end of the range corresponding to offers in Europe. At the same time, local mills were reported not to be pushing sales overseas following the improvement in local sales prices and given the expected supply tightening with several mills announcing shutdowns for the April-June period. Besides, according to sources, local sales prices have been improving amid lower supplies from mills and large mills have not finalized any export allocations for the current quarter in view of higher domestic realizations.
In Vietnam, many Chinese traders have stopped offering cheaper HRC to Vietnam due to the news about the Chinese authorities starting an investigation into non-VAT trading, in an effort to limit exports. At the same time, while panic has been mounting over the future scenario in China, Japanese HRC suppliers have managed to sell some volumes with additional discounts to Vietnam, though still at higher levels compared to those offered from China. Most offers for ex-China SAE1006 HRC have been estimated by Vietnamese customers at $565/mt CFR, against $555-565/mt CFR last week. Besides, offers for Q235 and SS400 HRC have been heard at $545-550/mt CFR for June shipment, against $540-542/mt CFR reported at beginning of the week. Meanwhile, this week, according to sources, a deal for around 30,000 mt of ex-Japan SAE1006 HRC has been reported at $568/mt CFR for June shipment, while most Japanese offers have been heard at $570-575/mt CFR levels, down by around $5/mt week on week. Besides, suppliers from Taiwan have been offering their SAE1006 HRC at around $575/mt CFR Vietnam this week. Offers for ex-India HRC have been estimated at around $570-575/mt CFR levels as well. Thus, the SteelOrbis reference price for import SAE1006 HRC has moved to $565-570/mt CFR, against $555-565/mt CFR last week.
In Europe, domestic HRC prices have already reached the bottom given that most mills both in Italy and in the north of Europe have started to make attempts to raise their offers. Workable prices in the EU have settled at around €630-640/mt ex-works, against €610-630/mt ex-works last week, while mills have started to aim offers at €650-670/mt ex-works, versus €630-640/mt last week. According to sources, service centres and distributors had orders waiting for market stabilization, and now we will see medium restocking activity with a controlled rebound and some period of stable prices. In the meantime, currency fluctuations have affected import HRC prices in Europe this week, with most offers showing a slight upward movement. Specifically, most ex-Asia HRC offers have been heard at €600-610/mt CFR southern Europe, up by €10/mt week on week. Furthermore, offers for ex-Egypt HRC have been reported at around €610-615/mt CFR southern Europe, while indicative offers for ex-Turkey HRC have been estimated at around €625/mt CFR, including duty.
Turkey’s HRC prices have rolled back a little in the domestic market given the rather sluggish demand, and by the end of the week mills are offering at $620-635/mt ex-works to local buyers, down $10/mt over the past week. Another reason is the stalled demand for coated steel of Turkish origin, both inside and outside the country. In addition, import scrap prices have remained relatively stable, while the same trend is observed in the import slab segment. As regards exports, HRC prices from Turkey are at $600-615/mt FOB base, though there has been talk about sales at $590-595/mt FOB to the EU and North Africa. Some sizeable tonnage has also been sold to Ukraine at around $600/mt FOB. In the import segment, HRC offers from China have increased this week, mainly on the back of reports of inspections being carried out in relation to the non-VAT trade. For now, most market players do not foresee any significant impact, though the low-priced offers for HRC from China may be off the table for a while. By the end of the week, offers for Q195 material have settled at $580-590/mt CFR, up from $570-575/mt CFR seen previously.
In the GCC, this week several HRC lots were obtained from Japan and China. Meanwhile, as investigations began in China into non-VAT traders, offers from China started to increase. As a consequence of this week's sales, Japan has sold about 45,000 mt of HRC at $570/mt CFR to different GCC countries for June shipment. Furthermore, according to sources, China sold two distinct batches of 2.75 mm and 1.2 mm thick HRC to Saudi Arabia at $585/mt CFR and $630/mt CFR. At present, SS400 offers ex-China are reported at $560-585/mt CFR for May and June shipments, up from $550-555/mt CFR the previous week. Nevertheless, considering the generally lower expectations in the GCC and the slower demand, particularly from Emirati customers, Indian and South Korean suppliers have chosen to withdraw offers and to concentrate on their domestic markets.