Imported Chinese HRC offers to Middle East (ME) inched up for the week, the offers for tier 1 mills are hovering around $560-570/t CFR UAE and for tier 2 mills the offers are ranging between $550-555/t CFR UAE against $540-545/t CFR UAE a week ago.
Shanghai Futures Exchange (SHFE) HRC futures rose by RMB 34/t ($5/t) w-o-w to RMB 3,818/t ($527/t) on 23 April against RMB 3,784/t ($522/t) last week. However, SHFE futures have inched down by RMB 5/t ($1/t) d-o-d against RMB 3,823/t ($528/t) on 22 April.
Japan’s HRC export offers to ME are around $570-575/t CFR UAE. In addition, a deal of around 45,000 tonnes (t) were heard concluded at similar price levels for June shipments. Moreover, Japanese steel exports volume in 1 April to 31 March (FY’23) edged up on y-o-y basis to 32.077 million tonnes (mnt) compared to the previous year, marking the first increase in two years. While, exports to the ME from Japan surged reaching 963,000 t in FY’23, as per data released by the Ministry of Finance.
Indian mills are not actively offering for exports due to planned maintenance shut down and limited export allocations along with higher domestic prices. Last indicative prices to ME were around $595/t CFR. However, offers from China and Japan to ME are very competitive due to which Indian prices are not viable in the market.
Domestic UAE market scenario: The domestic steel demand in the UAE is weak due to heavy rain which caused disruptions and impacted steel demand. The country experienced the heaviest rainfall, leading to flooding and infrastructure problems. Steel mills expect lower demand this month due to the emergency. Moreover, many construction sites are not fully operational. Recovery efforts are underway but it will take another week to return to normal.
Outlook
China’s SHFE futures saw a decline on d-o-d basis due to extreme weather conditions and heavy rain in the region. Furthermore, geopolitical instability can have an indirect impact on global steel prices through disruptions to supply chains and increased investor speculation. The market is expected to rebound as weather conditions improves.