[SMM Analysis] Indonesian HRC Low-Price Pressure Persists; Weak Steel Demand Continues Across Southeast Asia

China–Indonesia Billet Spread Holds Narrow; Slab Spread Turns Positive

In terms of the spread model, the China–Indonesia billet FOB spread has held within a narrow band, averaging -3 USD/t for the month (vs. a year-to-date average of -10). Some traders report that Indonesian billet offers remain relatively low, though the inversion has narrowed from the year-to-date average of -15. On the slab side, a notable recovery is underway: the monthly average spread has turned positive to +3 USD/t, a marked improvement from the half-year average of -30.

Data source: SMM

Southeast Asian Demand Yet to Rebound; Price Remains the "First Principle" of Order-Taking

China's HRC and galvanized exports to Southeast Asia have remained weak recently, with no sign of a demand recovery at the end-user level. Downstream procurement continues to follow a "bearish wait-and-see, buy-as-needed, restock-slowly" rhythm, and order intake hinges heavily on price competitiveness.

By regional competitive landscape: Indonesian material continues to move at low prices on the back of integrated industrial-park cost advantages and logistics convenience, while Vietnamese domestic mills have passively followed with covert price cuts to secure orders. By comparison, Chinese HRC offers remain relatively high, leaving exporters caught between volume and price, with no distinct edge in order-taking.

By product category: Hot-rolled-substrate galvanized (hot-rolled-based HDG) coil has seen further declines in order intake under continued pressure from low-priced buy-side bids. On the demand side, although pre-stocking by some air-conditioner manufacturers has brought a marginal improvement, the drag from the construction sector remains significant, and a meaningful rebound is unlikely in the near term.

On market sentiment: marginal changes are emerging — some HRC sellers have begun signaling intent to hold prices firm. With the month-end settlement window approaching, coil prices are expected to stabilize by end-August. Two key signals warrant close attention ahead: (1) the direction of Hoa Phat's monthly price adjustment for next month, and (2) whether Indonesian mills follow suit in supporting prices. Together, these will determine the pace at which the regional price center repairs in September.

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