[SMM Analysis] Steel Price Gap Narrows as Fluctuations Decrease; Global Markets Face Pressure

Price spread moves sideways

From the perspective of the price spread model, the China-India slab price spread rebounded from a low level and tightened significantly. Indonesia's significant price cuts led to a sharp contraction of $15/mt in the spread between the two recently. The current level is notably below the quarterly average (-44), largely returning to near the annual average line (-23). For HRC, affected by the new EU quotas, Turkey's stranded sheets & plates flowed back into domestic sales, causing a price collapse. Mainstream HRC export offers plummeted to $585/mt FOB, leading to a significant narrowing of the price difference with China. In addition, the price spread between China and the Black Sea region also narrowed. Due to weak demand and restricted exports, Russia's export offers adjusted downward simultaneously. However, according to SMM survey, despite steel mills' low prices and concessions, actual transactions were relatively limited.

Data source: SMM

Import Resource Competition Continues, Prices Under Pressure

Last week, the Southeast Asian steel market was generally in the doldrums, with regional demand remaining sluggish. Although domestic steel mills in Vietnam sharply lowered HRC prices, buyers still focused on digesting inventories and purchasing as needed, while transactions for Indian and Indonesian materials were limited. For semi-finished products, Asian slab prices continued to decline, with Vietnam’s export offers falling to $490/mt FOB and Indonesian offers around $475–495/mt FOB, while even cheaper Chinese materials added to market pressure. Thai wire rod demand was also weak, with buyers showing low acceptance for 82B wire rod at $570/mt. In Malaysia, downstream procurement remained cautious, and the HRC market continued to move sideways. Overall, high inventories, weak off-season demand, and competition from low-priced imports are expected to continue to put pressure on prices of finished and semi-finished steel products in Southeast Asia.

Russian Export Transactions Weaken

Last week, Russian HRC export transactions were extremely limited. As domestic demand was moderate, most steel mills had withdrawn from overseas markets. Over the past two weeks, an unsanctioned mill lowered its export price by $10–20/mt to $510–520/mt FOB Black Sea, and after selling a small volume of August-delivery cargoes at $525/mt, it closed its order book due to domestic buying sprees and the weakening Turkish market. Another sanctioned mill, after lowering its price by $5–7/mt, offered September-shipment HRC at $555/mt FOB to Iran/CIS, with the current sales round expected to wrap up soon and no further Black Sea offers planned. Other mills, as domestic demand far exceeded expectations, are expected to suspend export business for the next 1–2 months.

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