[SMM Analysis] Overseas Steel Price Spread Continues to Narrow, Off-Season Impact Intensifies

[SMM Analysis] Overseas Steel Price Spread Continues to Narrow, Off-Season Impact Intensifies

From the price spread model, the price spread between China and Indonesia steel billet continued to narrow, with China's offer raised while Indonesia's remained stable to slightly lower. Meanwhile, the driving force behind overseas steel price increases weakened somewhat, and the price spread continued to narrow. Notably, as India's domestic demand slowed down, Indian steel mills (such as RINL) began returning to the international market to compete for orders, causing the price spread between Indian and Chinese resources to narrow.

By sub-market, last week in Southeast Asia: Formosa Ha Tinh Steel Corporation in Vietnam lowered its HRC offer for large-volume orders by $5-10/mt to $598-603/mt (CIF Vietnam), while offers from other origins remained largely stable amid limited buying interest and a lack of firm bids. In Vietnam's long steel market, market activity weakened due to persistent hot weather and soft construction demand, though government infrastructure projects continued to advance steadily. Market participants noted that long steel sales declined in May and may weaken further before the rainy season arrives in July. Although steel mills have not officially cut rebar prices, some have begun offering discounts of approximately 50-200 VND/kg ($2-8/mt) due to sluggish dealer demand. Meanwhile, in Indonesia, a steel mill lowered its export slab offer for July shipment by $5/mt MoM to $525/mt (FOB).

Middle East: Last week, Saudi Arabia's HRC import market overall exhibited a strong tug-of-war between "firm cost side and weak end-use demand." Driven by geopolitical premiums and overseas supply-side price hikes, the overall center of import landed costs shifted upward, but downstream buyers had limited capacity to absorb high-priced resources, wait-and-see sentiment was strong, and actual overall trading activity during the week remained sluggish. Meanwhile, Middle Eastern geopolitical tensions continued to disrupt supply chains. Due to restricted passage through the Strait of Hormuz, overseas HRC resources destined for Saudi Arabia still heavily rely on the western port of Jeddah for delivery. Uncertainty in the logistics chain and freight premiums continued to strongly push up the landed cost of Asian resources into Saudi Arabia. In addition, Galva Hub, located within the Metal Park industrial zone in KEZAD, Abu Dhabi, has successfully completed operational testing of the region's largest galvanizing pot (accommodating nearly 900 mt of zinc) and is about to initiate zinc melting and enter the formal production phase, while deepening downstream supporting construction for employee accommodation projects.

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