Prices in the global HRC market seem to have hit a temporary bottom early this week, as the Chinese market improved on Wednesday following some news of report for the real estate market and the rebound in futures prices at a time when Chinese mills’ profits have dropped to a nine-year low. The import markets globally have taken a pause, while watching further developments in China.
Export offers for boron-added SS400 HRC from large Chinese mills dropped by $30/mt in the past week to $455-465/mt FOB, for October shipment, before correcting up slightly to $460-465/mt FOB on Thursday. Some mills have voiced higher offers at $470-475/mt FOB but, since the market has not settled yet, they are not considered workable. The tradable prices for ex-China HRC and Q195 have been estimated at $448-455/mt FOB, against $465-480/mt FOB at the beginning of last week. This sharp fall in the export market has been in line with the situation locally, where prices have lost RMB 140/mt ($20/mt) over the past ten days. Prices in the local market have been fluctuating less recently, but, still despite the rebound in futures prices, the week has ended with another RMB 40/mt decrease in the local HRC market.
Over the past week, the gap between local Chinese HRC and rebar prices has narrowed significantly to a historical low as demand for Chinese HRC has been heavily impacted by both poor domestic consumption and growing concerns overseas with more AD investigations in the main sales destinations facing Chinese sellers. The gap between local Chinese HRC prices and local rebar prices on ex-warehouse basis has fallen from over RMB 200-250/mt or $28-35/mt in June and July this year to as low as RMB 32/mt or $4.5/mt on August 19, dropping to a historically low level. By Friday, this gap has improved to RMB 43/mt, but it is still far below the normal margin.
On August 19, local Vietnamese producer Formosa Ha Tinh Steel (FHS) announced its new HRC prices for domestic customers, having delayed its announcement by around one week. The new offers have been revised downwards, as expected by most market insiders, in line with the offers of the other Vietnamese producer Hoa Phat Group. However, most market insiders expected its new prices to drop more as FHS’ new offers are still higher than ex-China HRC offers by at least $45-50/mt. More specifically, FHS’ prices for non-skin passed SAE1006 and SS400 HRC in the local market for September-October shipment have settled at $528/mt CIF for orders for a minimum of 20,000 mt, against $560/mt CIF last month, while for 10,000-20,000 mt orders FHS’s new price stands at $531/mt CIF Vietnamese ports, down by $32/mt month on month. In the meantime, offers for ex-China Q235/SS400 HRC in Vietnam have been falling sharply, decreasing to $455/mt CFR on Monday, August 19, down by $15-20/mt since the end of last week, and losing more than $60/mt over the past month. The week has ended with prices at around $460/mt CFR without any response from customers.
Ex-India hot rolled coil (HRC) prices have showed a slight downward bias this week, though the offers have been considered to be “largely irrelevant” as large mills have continued to refrain from submitting offers in view of declining demand in the Middle East and uncertain trade conditions in Europe, combined with multiple cheaper options from competing suppliers, especially those from China. Sources said that ex-India HRC prices have settled at $560-580/mt FOB, against $560-590/mt FOB last week, but these prices were “not even indicative” as no offers have been submitted by large mills during the entire current month.
In Turkey, the HRC market has remained generally weak in terms of demand, while prices have mostly rebounded, causing buyers to wait further. In particular, local mills have started voicing official offers at levels $5-10/mt higher for October deliveries, citing limited allocation and trying to take advantage of the expected definitive antidumping decision on HRC from China (and other origins also). By the end of the week, domestic HRC prices in Turkey have settled at $580-600/mt ex-works/CFR Marmara depending on the supplier. Some mills are even voicing $605-610/mt ex-works base levels but for small volumes and a shorter lead time. As regards exports, Turkish producers are mainly offering at $575-590/mt FOB, partly due to the absence of Europe and the overall lack of demand. In the import HRC segment in Turkey, ex-China Q195 offers decreased early this week to $485-490/mt CFR in most offers, but later rebounded and settled at $495-500/mt CFR. The ex-China cargoes are available for October shipment. No confirmed import bookings from China have been reported and buyers Turkish currently prefer to wait, most probably counting on discounts in the domestic market. The main factors behind such expectations are the falling prices of scrap and slab, coupled with the limited demand.
In the UAE, although import HRC prices have dropped significantly, trade has remained quiet as the local market is still sluggish. This week, Chinese suppliers trying to conclude sales reduced their prices by $30/mt to $480-490/mt CFR for October shipments, despite the rises in futures prices in China. Likewise, Japanese suppliers have reduced their offers to $530/mt CFR for end-of-September shipment, down from $560/mt CFR last week. However, suppliers from India and South Korea are still holding back their offers from the GCC because of the slower trade activity in the region and the aggressive HRC offers from China.