Global View on HRC: Trade quiet globally, prices stabilize in most regions except China

Friday, 05 July 2024 17:21:44 (GMT+3)   |   Shanghai
       

During the past week, hot rolled coil (HRC) prices in the Chinese domestic market indicated certain rises amid a slight recovery in HRC futures prices and some improvement in sentiments among Chinese exporters. However, the euphoria did not last long since, by the end of the week, the mood has worsened again following a decline recorded in futures prices. Other Asian suppliers have remained rather pessimistic as well, with local HRC prices falling slightly in Vietnam, while ex-India HRC prices have remained stable, but Indian mills have continued to hold back offers. At the same time, trade activity has been quiet in the European HRC market, while most “other countries” have exceeded the EU quota cap. Besides, Turkey’s HRC market has failed to show much improvement over the past week amid slow end-user demand.

Although average HRC prices in the Chinese domestic market have indicated some rises in the past week amid a slight recovery in HRC futures prices, Chinese HRC exporters have been less positive so far, with big mills keeping their offers for overseas buyers mainly stable, while offers from smaller mills and traders have been fluctuating. Specifically, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $520-530/mt FOB, with a midpoint at $525/mt FOB, the same as last week. At the same time, smaller mills have been offering their materials mainly at $515-520/mt FOB, slightly higher than reported last week at $510-520/mt FOB.  Meanwhile, offers from traders have been fluctuating this week, with offers, mainly those to Vietnam, showing ups and downs, while offers to other destinations like the Middle East and Turkey have been reported mainly at $515-520/mt FOB, against $515/mt FOB last week. Domestic HRC prices in China are at RMB 3,830 /mt ($527/mt) ex-warehouse on average on July 5, with the average price level RMB 35/mt ($4.8/mt) higher compared to that recorded on June 28, but down by RMB 20/mt ($2.7/mt) from the previous day, according to SteelOrbis’ data.

Ex-India HRC prices have remained stable at $560-610/mt FOB, with the higher end of the range corresponding to offers to Europe at around $665/mt CFR, the same as last week, while the lower end of the range corresponds to indicative offers in Asia and the Middle East. However, large mills have continued to refrain from submitting offers amid the softening of prices in Asian destinations, while, even though some buyers in the Middle East are back in the market, bids have failed to result in transactions.

In Vietnam, this week, Vietnamese HRC producer Hoa Phat Group has announced its new local HRC prices mainly for September shipment, cutting them by around $13-15/mt from the previous month to $551-552/mt CIF. The decision is attributed to the extremely slow demand in the country and is in line with market sources’ expectations, and, even though import quotations, for ex-China HRC in particular, have shown a slight recovery this week, the mood among most Vietnamese buyers has remained negative so far. According to sources, at the beginning of this week Chinese traders slightly increased their offers for Q235/SS400 HRC for Vietnamese buyers to $520-525/mt CFR, up by $2-5/mt week on week, mainly amid the rises in local HRC prices and HRC futures prices in China, while by Thursday offers for ex-China materials have already been voiced at $535/mt CFR. However, by Friday, July 5, most offers have rolled back to $525/mt CFR, sources said. Meanwhile, offers for ex-China SAE1006 HRC have been reported at $540-545/mt CFR, against $540/mt CFR at the beginning of the week, and, although  buyers’ bids are still voiced at $535/mt CFR, the SteelOrbis reference price for import SAE1006 HRC has moved to $540/mt CFR, versus $535-540/mt CFR last week.

Trade activity in the European HRC market has remained very slow given the “sufficient stocks” of most distributors and service centers, while most mills have withdrawn their offers from the market after closing their order books for July-August deliveries. According to sources, almost no firm offers for HRC have been voiced from European mills this week. The tradable prices have been estimated at €630/mt ex-works northern Europe, the same as last week, and at €620/mt ex-works Italy, against €625/mt ex-works last week. Meanwhile, sentiments differ for the next few months regarding the future price trend in Europe. Specifically, while on the one hand, some market insiders expect the European HRC market to remain stable over the summer holidays given the absence of a significant demand improvement, on the other hand, other sources, mills’ representatives in particular, are more positive, expecting to push their prices up for September deliveries. In the meantime, while trade in the import HRC segment has been close to zero, most Asian suppliers have slightly cut their offers to European buyers this week to €595-605/mt CFR, down by €5-15/mt week on week. Offers for ex-Egypt HRC have been heard at $650/mt CFR, down by $10/mt week on week, which translates to around €602/mt CFR southern Europe. Furthermore, offers for ex-Turkey HRC have been estimated at $680-690/mt CFR, including duty, which corresponds to €630-639/mt CFR, the same as last week.

The Turkish HRC market has softened over the past week due to low demand and the continuing aggressive stance of China. Turkish domestic offers have come down from $590-610/mt ex-works to $585-595/mt ex-works, and, according to sources, some large lots have been booked at $580/mt ex-works. As regards exports, buyers have achieved $570-585/mt FOB, versus initial offers of $590-600/mt FOB. In the import segment, the offers from China have been hovering at around $550-560/mt CFR, with deals expected since some re-rollers need to restock.

In the UAE, while HRC import offers remain unchanged, particularly with Chinese offers being more appealing, Emirati purchasers remain unwilling to purchase and no deals have been reported this week. However, despite the slow trading activity, South Korean and Taiwanese suppliers began offering this week to the UAE. According to sources, Chinese suppliers' SS400 offers this week are at $550-565/mt CFR, the same as the previous week. Meanwhile, although Indian suppliers' indicative HRC offers to the GCC have remained stable at around $570-590/mt CFR, the majority of market players in the UAE say no offers have been received from India. Furthermore, South Korean and Taiwanese suppliers have begun offering HRC at prices around $590-595, while Japanese suppliers are still absent from the UAE this week. Additionally, Indonesia’s Dexin has begun offering from its new HRC line this week at $600/mt FOB. Although this price is steep for the GCC, the producer’s future offers may be more reasonable.


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