While at the beginning of the week the mood among Chinese HRC suppliers improved due to the recovery of futures prices in China, with export HRC prices having increased in the main trade destinations, including Asia, the Middle East and Turkey, any euphoria over further price growth has disappeared together with futures prices slump by the end of the week. Meanwhile, trade activity in the European HRC market has remained muted since, while European mills in the north have started slowly returning to work, mills in the south have not started to reopen after the summer holidays so far, expected to coming back next week. Thus, for now the uptrend in HRC segment globally is shaky and market sources believe that only with positive changes in sales of finished steel locally can confidence in the HRC market increase.
At the beginning of this week the long-standing downward trend of Chinese HRC export prices has started to reverse mainly amid rebound in futures HRC prices and significant rises in local HRC prices in the country. Specifically, big Chinese mills hiked their offers for boron-added SS400 HRC by around $5/mt week on week to $460-470/mt FOB, for October shipment, while Chinese traders have increased their prices considerably more – by around $13.5/mt on average, standing in line with mills’ offers. However, euphoria did not last long as by the middle of the week HRC futures prices have started to decline once again. Specifically, as of August 29, HRC futures at Shanghai Futures Exchange are standing at RMB 3,311/mt ($464/mt), up by RMB 64/mt ($9.0/mt) or 2.0 percent since August 22, but down 0.6 percent compared to the previous trading day, August 28.
Ex-India HRC prices were stable at $560-580/mt FOB and while sellers continued to stay away from submitting offers in Europe, with only indicative offer from one of the Indian mills heard at $630/mt CFR, or around $575/mt FOB, some mills were heard to have resumed placing offers in the Middle East and Southeast Asia. Though for now deals have been confirmed only to non-traditional destination, Nepal in particular, with additional discounts. Specifically, sources confirmed that deals from Indian mills have been reportedly signed only to Nepal during the past weeks at around $570/mt delivered to Indian border.
At the same time, market insiders have reported higher volumes of HRC imports still arriving in India from China, which limit the recovery potential of local prices. Specifically, around 40,000 mt of ex-China HRC from suppliers without BIS certification have been sold to India at $480/mt CFR level last week. Besides, another deal for around 30,000 mt of ex-China HRC with BIS certification has been signed at $490-495/mt CFR for end-September shipment. Meanwhile, according to sources, offers for ex-Japan and ex-South Korea SAE1006 HRC have been estimated at around $530/mt CFR, with only a few occasional deals reportedly signed for ex-Japan HRC at above mentioned level during the past weeks.
In Vietnam’s HRC import market sentiments have remained largely negative given no visible signs of a demand recovery as well as slow business activity for flats products in the key trade destinations overseas. However, some rebound has been seen in import prices from Chinese suppliers since the end of last week, supported by the futures price recovery. More specifically, offers for ex-China Q235/SS400 HRC have increased to $470-475/mt CFR for October shipment, compared to $460/mt CFR at the end of last week and up by $15-20/mt since the beginning of last week. According to sources, several deals for small tonnages have been signed at $470-473/mt CFR at the beginning of this week, however, in general the trade has remained limited. Meanwhile, the SteelOrbis reference price for import SAE1006 HRC has moved to $485-490/mt CFR, up by $5-10/mt week on week, but down by $10/mt on the higher end of range since Friday, August 23.
At the same time, by Thursday, August 29, local Vietnamese producer Formosa Ha Tinh Steel (FHS), has revised its offers downwards for domestic customers following the initial price announcement back on August 19. More specifically, after the announcement of new local HRC offers on August 19, this week FHS has decided to revise its offers, declining them by $17/mt to $511-523/mt CIF for October shipment, depending on the size of order.
During the last week of August, trade activity in the European HRC market has remained muted since, while European mills in the north have started slowly returning to work, mills in the south have not started to reopen after the summer holidays so far, expected to coming back next week. Workable prices for HRC in Europe are evaluated at €590-600/mt ex-works, both in Italy and northern Europe, mainly the same as last week but compared to €610-620/mt ex-works at the beginning of August. At the same time, import HRC trade is still in lull in southern Europe due to a safeguarding review, and an antidumping investigation into HRC from Egypt, India, Japan and Vietnam. Import offers have been voiced at €560-590/mt CFR, down by €10/mt on the higher end of range week on week.
In Turkey, the HRC prices have rebounded in the import segment due to an increase in futures in China, while remaining relatively stable for the local origin. Still, Turkish mills are finding it challenging to trade at their current official offer levels, taking into account weak demand domestically and for now quiet Europe, despite that the holiday period has recently ended. Currently, the domestic HRC offers in Turkey are at $580-600/mt ex-works for October deliveries, stable over the week, while the mark of $575-580/mt ex-works at best is considered workable. On exports, the official indications are at $580-590/mt FOB but $570/mt FOB is still considered reachable. Moreover, unless there is a rebound of local HRC prices in the EU, Turkish HRC producers are expected to be able to provide further discounts, taking into account weaker scrap ($355-363/mt CFR) and cheap slab ($465-470/mt CFR from Russia and $475-485/mt CFR from Asia). In the import HRC segment, Turkey has been receiving offers from China for Q195 material at $503-505/mt CFR and up to $510/mt CFR for 45,000 mt lots and for October shipments. Last week, the offers stood at $495-500/mt CFR. No fresh deals have been reported lately due to a price rebound and buyers’ cautiousness.
In the UAE, since local business activities have remained sluggish, Emirati buyers have remained cautious about importing HRC. Meanwhile, unlike last week's softening trend, import prices this week, particularly from Chinese suppliers, have risen as future prices increase. According to sources this week, China has offered SS400 at $500-520/mt CFR for October shipment, compared to $480-490/mt CFR last week. Japanese suppliers, on the other hand, have chosen to stick with last week's offering of $530/mt CFR to the UAE. However, reports claim that lower level offers to the GCC of around $520-525/mt CFR have been heard from Japan. Additionally, this week, a few Indian suppliers decided to offer HRC to the GCC for $580/mt CFR, but, given other import offers, this offer is impractical and extremely high.