Global HRC prices are falling under the influence of seasonal factors

European importers postpone imports for the 4th quarter, as they have almost exhausted the quota for duty-free deliveries

Last week, world prices for HRC fell – this trend was observed in Europe and the USA. The Chinese market has recently seen sharp fluctuations in prices, which did not add optimism to producers and exporters.

In Western Europe prices for hot-rolled sheet, which in July, according to Kallanish, remained at the level of €640-690/t, during the period July 28 – August 4 fell by 1.4% – to €640-680/t. On Italian market the price of hot-rolled coil for the week remained unchanged – €640-660/t.

It is expected that in the current month, the European HRC market will remain calm amid technical maintenance at enterprises. S&P Global sources reported, that some producers are preparing for an expected restocking in the fall and are considering price increases. However, their growth after the summer season is still considered unlikely.

Participants of the European market predict that by the end of the year there will be a large supply of HRC in the EU, taking into account imports. According to the European Commission, the quota for these products for other countries for the current quota period (July 1 – September 30) was exhausted on July 25; for South Korea, as of August 3, the quota was filled by 92.03%. Most importers leave the material for the next quota period to avoid paying the 25 percent duty.

In China prices for HRC both domestic and export according to the Kallanish, fell at the end of last week due to the effects of Typhoon Doksuri, which led to a decrease in demand for these products and an increase in overall inventories.

Recently, prices for hot-rolled sheet have fluctuated greatly. As of July 21, they were $555-565/t FOB, on July 28 – $575-585/t, and at the end of last week the price was $565-575/t.

In late July, China’s National Development and Reform Commission announced 20 measures to promote consumption and economic recovery. Some of them related to the automotive industry and the household appliances sector, which are the main consumers of HRC. However, the impact of this announcement quickly wore off as demand remained weak and virtually no new stimulus measures were introduced.

Sharp fluctuations in prices for a short time do not contribute to the improvement of market sentiment, so some producers took a wait-and-see position. At the same time, exporters do not feel optimistic about the recovery of the Chinese economy in the short term.

According to SMM data, in the spot market, the main supply of hot-rolled coil fell by RMB 50-100/t last week. The supply remained low. Going forward, as some steel plants come out of repair, it will increase, but overall demand is expected to remain weak. The market also continues to be pressured by questions regarding the timing and volume of steel production reduction.

In USA prices for hot-rolled coil last week also fell – according to Argus data, large tonnage discounts continued to be reported. The market was largely unaffected by unplanned maintenance at the Steel Dynamics plant in Texas, which restarted hot rolling in late July and the smelter has been idle since the beginning of the month.

The terms of fulfillment of orders from American producers have increased somewhat, but most service centers consider them acceptable in order to replenish stocks on the spot market if necessary. Interest in imports continued to fall as delivery dates from most countries reach the fourth quarter.

As GMK Center reported earlier, the world HRC prices fell in June amid high competition in the markets. The European market was pressured by import offers, and steel producers in China were waiting for the next steps of the government.