The decline in futures prices in China has dragged down price indications for hot rolled coil (HRC) globally following a brief rebound last week. Sentiments have remained negative in Asia, with deal prices for import HRC decreasing by at least $30/mt week on week in Vietnam. At the same time, ex-India HRC prices have been stable, but most Indian mills have kept refraining from submitting offers due to tighter competition. Import prices for HRC in Turkey have weakened sharply, though local producers, on the contrary, have been attempting to increase their prices, citing limited allocations for deliveries in September and early October. Trade in the European HRC market is on pause due to the summer break, with regional HRC prices remaining at the same levels as last week.
The mood among Chinese HRC exporters has worsened again after the slight rebound last week. Specifically, this week, with worse sentiments appearing again in the HRC futures market, the tradable level for HRC has declined by at least $25/mt since last week in new offers from Chinese traders globally, falling to $460-465/mt CFR by Friday, August 16. Besides, following the decline by $10/mt in offers from Chinese mills at the beginning of this week to $485-495/mt FOB levels, by Friday export offers for boron-added SS400 from most big mills have been estimated at $480-485/mt FOB. In the meantime, during the given week, local demand for HRC has continued to be sluggish in China, while inventory of HRC has been at high levels, with bearish sentiments prevailing among market players. Furthermore, HRC producers’ financial losses have increased, while the gap between supply and demand has not improved, exerting a negative impact on the market. At the same time, HRC futures prices have continued their downtrend, also weakening the support for the spot market. As of August 15, HRC futures at Shanghai Futures Exchange were standing at RMB 3,222/mt ($451/mt), decreasing by RMB 259/mt ($36.3/mt) or 7.4 percent since August 8, while down 1.71 percent compared to the previous trading day, August 14.
Ex-India HRC prices have remained unchanged at $560-590/mt FOB, depending on the destination, but are considered ‘notional’ as no large mill is heard to have submitted offers during the past week amid reports that the European Commission has initiated antidumping (AD) investigations into imports of HRC from several countries including India. Besides, tough competition with cheaper Chinese HRC has been affecting Indian suppliers in other trade destinations, such as the Middle East. In addition, buyers in Europe have also been absent due to the summer break, while Middle Eastern buyers have been preferring alternative cheaper options particularly ex-China material, which was offered at as low as $520/mt CFR UAE at the beginning of this week and at around $490-500/mt CFR at the end of the week.
A negative mood has kept prevailing in Vietnam’s HRC import market as import prices have slumped further. Specifically, while on Wednesday, August 14, ex-China SS400 HRC offers to Vietnam were voiced at $470/mt CFR, down by $5/mt compared to the previous day and down by $20-30/mt since the beginning of last week, by the end of the week, on Friday, August 16, ex-China HRC offers have been estimated at $460-465/mt CFR level. Besides, according to sources, following a few deals signed at $477/mt CFR on Monday, August 12, the material changed hands at $470-472/mt CFR by the middle of this week, though most Vietnamese customers report that deals remain occasional and mainly for limited volumes.
In Turkey, all eyes have been on HRC offers from China this week since all of the buyers have been watching the nosedive in the prices. The week has started from a decline in offers for large Q195 lots from $525/mt CFR to $509-515/mt CFR. However, later on, taking into account the drop in futures, the ex-China HRC prices for Turkey have dropped to $490-495/mt CFR and even $485/mt CFR levels have been considered possible. The cargoes are for October shipment. Despite the significant slump, most of the buyers are still in a wait and see position, waiting to see the bottom for ex-China prices. However, some deals might be on the table shortly since some of the customers might prefer to book in order to average out the previous deal prices. Still, a lot will depend on how they evaluate the prospects of the AD rate in Turkey, while the results are expected to be announced in the end of September. The high rates, preliminary announced for China, are one of the reasons for such a sharp import offer price drop and also a factor, which is now restraining the deals. Taking into account high risk of paying the tax according to the state of their export licenses, most of the re-rollers are not finding themselves in a position for new bookings. Sources believe that the deals are likely to be concluded for the cargoes for early January deliveries. In the domestic market, Turkish mills, on the contrary, have increased the prices by $5-10/mt minimum to $580-595/mt ex-works base, while some small customers have also reported $600-610/mt ex-works offers. The reason for the increase is once again the AD case, of which Turkish mills are trying to take advantage. On exports, the official offers are at $570-580/mt FOB while the most recent deals have been closed to the south EU at $560-565/mt FOB, sources reported.