Southeast Asia: HRC offers hit 7-month high, market awaits FHS price revision

The Asian hot-rolled coil market has reached a seven-month high of $600/tonnes (t), driven by a combination of rising export prices due to soaring iron ore and coking coal costs, as well as a rebound in the previously sluggish Chinese steel market.

Towards beginning of December 2023, SteelMint reported that Hoa Phat raised monthly HRC (SAE1006, non-skinpasses) prices for March 2024 sales by $30 m-o-m. Post-revision, effective prices stand at VND 14,680/kg or $600/t CIF HCMC (southern region) against previous price of VND 14,020/kg ($570/t) excluding VAT. The company has increased prices amid improved domestic demand. Moreover, Chinese imported HRC offers have also risen.

Another steel major, Formosa Ha Tin Steel, is expected to increase its HRC prices this month.

In Asia's hot market, commodity prices fell below $600 between April and May. This decline was driven by an aggressive export push from China, coupled with weak demand for building materials in both China and Vietnam.

While Vietnamese demand remained sluggish, the economy is seen as bottoming out due to recent interest rate cuts. This has sparked a surge in trading activity due to the expectation of a rebounding steel market.

Since late October 2023, when China announced RMB 1 trillion government bond issuance, Asian markets have seen a significant upswing. Steelmakers, concerned about rising raw material costs, have also increased prices.

Also today, the world's top steelmaker Baosteel has increased HRC and thick plates prices for January 2024 sales by RMB 200/t ($28/t) m-o-m, sources informed SteelMint.

The Asian hot-rolled coil market is experiencing a significant upward trend, driven by rising raw material costs, concerns about future supply, and a seemingly improving demand outlook in Vietnam.