Middle East: Imported HRC offers fall tracking Chinese price drop
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Chinese HRC import offers to the ME dropped by $5/t CFR w-o-w to $595/t CFR UAE against $600-605/t CFR UAE a week ago. In addition, "ME buyers are going with Chinese material due to which Indian mills have lost few enquiries majorly due to prices" informed a reliable market source.
Following drop in Chinese offers, Indian hot-rolled coil (HRC) exports to the Middle East witnessed a slight decline this week, with offers falling to $625-630/t CFR, down from the previous week's $630-635/t CFR. However, owing to price disparity, buyers kept away from booking Indian-origin material. Moreover, Indian steel exports fell sharply by 44% to 37,696 tonnes (t) in January 2024 against 66,715 t a month ago.
Factors influencing Middle East market:
1. Chinese SHFE HRC prices shows mixed trend: China's Shanghai Futures Exchange (SHFE) dropped sharply post Lunar New Year holidays, resulting decline in Chinese export offers.
However, futures have shown some recovery from the last two days. Today's SHFE HRC futures increased by RMB 26/t ($4/t) to RMB 3927/t ($545/t) against RMB 3901/t ($542/t) a day ago. Moreover, the same dropped by RMB 19/t ($3/t) against RMB 3908/t ($543/t) a week ago.
2. Slow trade activities: Steel import prices in the United Arab Emirates and Saudi Arabia fell this week due to weak buying activity. Buyers are cautious and waiting to see how prices will settle before making significant purchases. The recent fluctuations and potential economic factors are causing them to wait for clearer trends before trade activities.
Outlook:
The short term outlook remains volatile with slow market activities in the region and uptrend in Chinese SHFE HRC future prices.
The World Steel Association (WSA) predicts, following growth of 9.4% in 2022, total steel demand in the MENA region is forecast to decrease by 3.5% in 2023 and increase by 3.5% in 2024. The UAE is expected to perform better among the GCC countries owing to its real estate sector and investment in non-oil sectors.