In the last week of September, the global hot rolled coil (HRC) market has been witnessing signs of optimism mainly amid the sharp increase in ex-China HRC offers following the rises in HRC futures prices in China. At the same time, given the significant increases in Chinese offers, most buyers globally have started to search for alternatives. Accordingly, other Asian suppliers have decided to take advantage of this opportunity, succeeding in selling sizable volumes of HRC globally. Specifically, suppliers like those from Japan have managed to sell HRC at rather competitive prices to Vietnam, Pakistan, Bangladesh and the UAE. In Europe, however, both local and import HRC prices have continued to move down, while buyers in the region remain skeptical that HRC prices have reached their lowest point and have been opting to maintain a wait-and-see approach.
Sentiments have improved in HRC market in China this week as HRC futures prices have increased after the Chinese government’s announcement of its stimulus policy. Thus, Chinese exporters have followed suit, increasing their offers, though most market insiders still believe that the price increase is temporary and that Chinese suppliers will maintain their positive sentiment up to the Chinese national holiday in the first week on October. Specifically, export offers for boron-added SS400 HRC from major Chinese mills have been estimated at $470-475/mt FOB, with a midpoint at $472.5/mt FOB, compared to $465/mt FOB at the beginning of this week and up by $10/mt week on week. At the same time, by the end of the week offers from smaller Chinese mills and traders have been estimated at around $470/mt FOB and above, against $450-455/mt FOB last week. Average HRC prices in the Chinese domestic market have increased amid rising HRC futures prices and the PBOC’s announcement of a cut in the reserve requirement ratio (RRR) for Chinese banks by 0.5 percentage points. Domestic HRC prices in China are at RMB 3,380-3,430/mt ($482-489/mt) ex-warehouse on September 27, with the average price level RMB 165/mt ($24/mt) higher compared to that recorded on September 20, according to SteelOrbis’ data.
Following the increase in import prices from Chinese suppliers at the beginning of the week, by the end of the week offers for ex-China HRC in Vietnam have indicated another hike by Friday, September 27, gaining more than $20/mt since Monday, September 23. Specifically, by Friday, September 27, offers for ex-China Q235/SS400 HRC have settled at $490-495/mt CFR for November shipment, against $465-470/mt CFR at the beginning of the week and up by $10/mt from the previous day. At the same time, indicative offers for ex-China SAE1006 HRC have been estimated at $510/mt CFR, though no firm offers have been heard so far. According to sources, deals have been rare for ex-China materials, as most customers doubt that prices will indicate a further uptrend after the long holiday in China. Thus, several deals for SAE1006 HRC were signed with mills from Japan and South Korea. In particular, at the end of last week- beginning of this week Vietnamese customers managed to book two sizable lots of SAE1006 HRC “before Chinese offers skyrocketed.” More specifically, a deal for 30,000 mt of ex-South Korea SAE1006 HRC was signed at $490/mt CFR for November shipment. Besides, another batch for 30,000-50,000 mt from Japan is reported to have been booked at $500/mt CFR for November shipment. The SteelOrbis reference price for import SAE1006 HRC has moved to $500-510/mt CFR from $495-500/mt CFR in the middle of the week and up by $20-25/mt week on week, based on the latest deal price for ex-Japan HRC and indicative offers for ex-China coils.
Apart from deals in Vietnam, Japanese suppliers have also managed to secure deals in other countries. According to sources, a deal for around 30,000 mt of ex-Japan HRC has been signed in Bangladesh at $500/mt CFR, which means the deal price has remained at the same level as reported in early September. Besides, another deal for 25,000 mt of ex-Japan SAE1006 HRC has been reported at $510/mt CFR Pakistan, down by $10-20/mt since late August. In the meantime, Japanese suppliers still struggle to attract the attention of Vietnamese buyers given the cheaper ex-China HRC. Furthermore, one of the Japanese HRC producers is reported to have sold around 28,000 mt of HRC at $495/mt CFR on average to the UAE, while most offers have been voiced at $500-510/mt CFR.
Ex-India HRC have been maintained relatively stable this week at $540-550/mt FOB, but most buyers across key destinations, including those in Southeast Asia, the Middle East and Europe, are not willing to commit trades, preferring a wait-and-watch policy. Offers for ex-India HRC in Europe have been reported at $590-600/mt CFR, which translates to around $540-545/mt FOB, down by $5/mt over the past week, though no fresh deals have been reported so far, as European buyers have refrained from purchases due to safeguard quota risks. Besides, according to sources, some mills have submitted a few offers to the Middle East, but no deals were followed through as deal prices are estimated at $500-510/mt FOB. According to sources, given the bullishness mounting in China, Indian mills are planning price increases as well in the coming months, trying to push for duties on import HRC, but seeing the current demand situation across the globe a long-lasting upward trend is doubtful.
This week, European HRC prices have continued to face downward pressure due to weak demand and oversupply, with buyers indicating room for further price reductions. Indictive offers from mills for local HRC in northern Europe have been estimated at €560-580/mt ex-works, the same as last week, though tradable prices have declined by €5-10/mt week on week to €540-550/mt ex-works. “€540 ex-works basis is the recent booking price in northern Europe, and there have been rumours of deals at €25-30/mt lower,” a market insider told SteelOrbis. Meanwhile, offers from mills in Italy have been estimated at around €550-560/mt ex-works, against €570-580/mt ex-works last week, while workable prices have settled at €540/mt ex-works, down by €10/mt week on week. In addition, buyers remained skeptical about whether HRC prices have reached their lowest point, opting to adopt a wait-and-see approach amid the declining market conditions. Some market participants have speculated that HRC prices may bottom out between October and November and that, after closing their order books for 2024, European mills may attempt to raise prices for the first quarter of 2025. Import offers for HRC have been estimated at €525-545/mt CFR, depending on the supplier, versus €530-560/mt CFR last week. The lower end of the range corresponds to offers for ex-Vietnam HRC at €525/mt CFR, down by €5/mt over the past week, while offers for ex-India HRC have been voiced at $590-600/mt CFR, which translates to around €528-538/mt CFR. In the import segment, trade has remained limited amid slow demand and the high risks related to the safeguard duty and the antidumping investigation against HRC from Vietnam, Japan, Egypt and Taiwan. Besides, according to market insiders, the latest news that EUROFER is pressing the EU to impose a blanket import duty, as well as the registration of all steel facing dumping and subsidy investigations - which the European Commission has decided to impose, is having a hugely negative impact on the import trade, which sooner or later should allow the Europeans to push up their prices.
In Turkey, most developments in the billet market continue to be seen mainly in the import segment, while in the domestic market Turkish mills have chosen to keep offers stable once again. Ex-China prices have moved in a couple of steps from $490-493/mt CFR to $510-520/mt CFR by the end of the week. The prices are for Q195 grade HRC of 3 mm and higher for November shipments. No deals have been reported as buyers are mostly believed to be expecting prices to settle at clearer levels following the long Chinese holiday in early October. Turkish re-rollers are expected to aim to book HRC from China at below $500/mt CFR, but prices seem firm at the higher levels for now, following the stimulus measures announced in China and the consequent rise in iron ore and futures prices. Higher Chinese prices, according to sources, may be used by Turkish mills to increase local HRC prices next week. However, for now their offers have remained at $580-590/mt ex-works and only rare indications for small tonnages have been heard at $600/mt ex-works. In the meantime, exports have remained quite limited given the weak market in the EU. The export price range from Turkey is at $570-585/mt FOB for November shipments, with some discounts possible. However, buyers’ bids are far below the price levels Turkish mills are willing to agree to.
In the UAE, some slight trading activity has been seen, with Emirati purchasers favoring Japanese materials at the end of the previous week, buying 25,000 mt of HRC from Japan at $495/mt CFR for November shipment. Meanwhile, previous offers from Japan to the UAE were at $500-510/mt CFR. Chinese suppliers, on the other hand, have decided to increase their offers to the UAE by $5/mt to $490-510/mt CFR for November shipment in response to their government's stimulus measures and rising future prices. However, given the slow trade activity and since HRC bid prices do not match exporters' desired levels, suppliers from South Korea and India are still not giving offers to the UAE.