[SMM Analysis] Steel Price Spread Fluctuation between Chinese and Overseas Markets Narrows; Most Markets outside China Remain under Pressure

[SMM Analysis] Steel Price Spread Between Chinese and Overseas Markets Narrows Fluctuations, Most Markets Outside China Remain Under Pressure

• Spread Moves Sideways

Spread model, the China-India slab spread rebounded from lows, tightening notably. A sharp price cut in Indonesia caused the bilateral spread to contract significantly by $15/mt recently. The current level is markedly below the quarterly average (-44) and has largely returned to near the annual average (-23). As for HRC, affected by the new EU quota, Turkish stranded sheets & plates flowed back to domestic sales, triggering a price collapse. Mainstream HRC export offers plunged to $585/mt FOB, leading to a marked contraction in the spread with China. In addition, the China-Black Sea spread also narrowed. Constrained by sluggish demand and export restrictions, Russian export offers moved down in tandem. However, according to an SMM survey, despite steel mills' low-price concessions, actual transactions were relatively limited.

Data source: SMM

• Import Competition Persists, Under Pressure

Last week, the Southeast Asian steel market was in the doldrums overall, with regional demand remaining persistently sluggish. Although Vietnamese domestic mills significantly cut HRC prices, buyers mainly focused on digesting inventories and purchasing as needed, resulting in limited transactions for Indian and Indonesian resources. Semis, Asian slab prices continued to fall, with Vietnamese export offers dropping to $490/mt FOB and Indonesian offers around $475–495/mt FOB, while lower-priced Chinese resources further increased market pressure. Thailand's wire rod demand was equally weak, with buyers showing low acceptance of 82B wire rod at $570/mt. In Malaysia, downstream procurement remained cautious, and the HRC market continued to move sideways. Overall, high inventory, weak off-season demand, and competition from low-priced imports are expected to continue weighing on prices of finished steel and semi-finished products in Southeast Asia.

• Russian Market Sees Weakening Export Transactions

Last week, Russian HRC export transactions were extremely limited. As moderate domestic demand, most steel mills have withdrawn from markets outside China. Over the past two weeks, one non-sanctioned mill cut export prices by $10–20/mt to $510–520/mt FOB Black Sea. After transacting a small volume of August shipment resources at $525/mt, it withdrew offers due to domestic buying sprees and a weakening Turkish market. Another sanctioned mill, after a $5–7/mt cut, offered September shipment HRC to Iran/CIS at $555/mt FOB, with this sales round expected to conclude soon and no further Black Sea offers anticipated thereafter. Other mills, given that domestic demand has significantly exceeded expectations, are expected to suspend export business over the next 1–2 months.

Copyright and Intellectual Property Statement:

This report is independently created or compiled by SMM Information & Technology Co., Ltd. (hereinafter referred to as "SMM"), which legally owns the complete copyright and related intellectual property rights.

The copyright, trademark rights, domain name rights, commercial data information property rights, and other related intellectual property rights of all content in this report (including but not limited to news, articles, data, charts, images, audio, video, logos, advertisements, trademarks, trade names, domain names, layout designs, and any other information) are owned or held by SMM or its relevant rights holders.

The above rights are strictly protected by the Copyright Law of the People's Republic of China, the Trademark Law of the People's Republic of China, the Anti-Unfair Competition Law of the People's Republic of China, and other relevant laws and regulations as well as applicable international treaties.

Without prior written authorization from SMM, no institution or individual may:

1. Use the entire or any part of this report in any form (including but not limited to reprinting, modification, sale, transfer, display, translation, compilation, dissemination);

2. Disclose the content of this report to any third party;

3. License or authorize any third party to use the content of this report.

4. For any unauthorized use, SMM will pursue legal liability against the infringer in accordance with the law, requiring them to assume legal responsibilities including but not limited to contractual breach liability, restitution of unjust enrichment, and compensation for direct and indirect economic losses.

Data Source Disclaimer:

(Other data in this report, excluding public information, are derived based on public information (including but not limited to industry news, seminars, exhibitions, enterprise financial reports, broker reports, National Bureau of Statistics (NBS) data, customs import and export data, various data published by major associations and institutions, etc.), market communication, and leveraging SMM's internal database model, through comprehensive analysis and reasonable inference by the research team. They are for reference only and do not constitute decision-making advice.

SMM reserves the right of final interpretation of the terms of this disclaimer and retains the right to adjust and amend the content of the disclaimer based on actual circumstances.