Posted on 22 Nov 2023
The traditional suppliers of hot rolled coil to the Gulf Cooperation Council, Chinese, Taiwanese and Japanese mills, have reduced allocations to take advantage of the uptrend. India has been out of the market for over six months, enjoying domestic market activity with better margins, notes Kallanish.
Chinese local currency appreciation against the dollar and oil price increase anticipation due to OPEC's production cut agreement have further pushed up HRC prices, according to a prominent senior mill official.
Last week, Far Eastern mills, including the Chinese, concluded deals for a total of 35,000 tonnes of 2mm+ re-rolling grade (SAE 1006) at an average price of around $610/tonne for shipment in mid and late February. An Aramco-approved Chinese supplier concluded a 14.28mm thick, 1,856mm wide X70 grade – American Petroleum Institute (API) compliant – deal with a Saudi pipemaker for a 15,000t parcel at $680/t for January shipment.
A Japanese major pulled down its 2mm SAE 1006 grade price to $620/t from $630/t for a 30,000t February-shipment enquiry but could not bag the order.
Unless otherwise mentioned, all prices are cfr Dammam, Jebel Ali or Sohar port basis.
This week, Japanese and Taiwanese majors have withdrawn from the market, informing customers they cannot allocate HRC for February shipment. Chinese first-tier 2mm SAE 1006 grade offers are at $625-630/t and 3mm at $605-610/t for February load-readiness.
Meanwhile, the major Chinese thin gauge supplier to the region has increased its 1.2mm SPHT-1 grade price to $650-655/t cfr for January shipment. This is produced on its ESP line.
In Saudi Arabia, year to date, pipemakers have been awarded steel supply contracts for oil, gas and water transport projects for a combined value of over SAR 3.5 billion ($933 million). In 2024, steel industry participants expect 400,000-500,000t of HRC to be imported. The local supplier can only supply a maximum width of 1x,650mm HRC, with buyers seeking wider sizes to reduce scrap generation during pipe manufacturing.
"Most buyers have accepted the HRC price increase last week but it did not stop; the price surge continues. Mills prefer to leverage better margins; thus, allocations are reduced or retreated from the market to adopt a wait-and-see policy,” explains a prominent sector participant.
Source:Kallanish
