For the Quarter Ending July 2022
During the Second quarter of 2022, the Hot Rolled Coil prices witnessed a see-saw sentiment. In April, the HR Coil prices showcased an upswing trend owing to a constrained supply chain and raw material shortages amidst the ongoing geopolitical tensions. Limited import offers and higher freight rates further increased HR Coil costs. However, some plants in the Midwest witnessed stock availability in late May, while others moved into June. Additionally, because of their extensive inventories, distributors and service centers purchase smaller volumes. The firms are concerned about additional hikes in scrap and energy costs. They are, therefore, reluctant to concede reductions in selling prices. Thus, several market players opted wait-and-watch outlook amidst the stagnant demand.
In the Asian market, the Hot-rolled coil market witnessed an upswing trend in the second quarter of 2022 owing to the robust demand since the sanctions imposed on Russia, coupled with the overall uncertainty. As per market participants, global HR Coil prices remained under pressure from the Russia-Ukraine conflict and its ramifications, particularly on raw materials and logistics. The Indian authority levied a 15% export duty on steel, effective May 22, to rein costs to control inflation. Thus, the Hot Rolled prices declined in June due to the weak demand, piled-up inventories, and poor export offers. The prices of HR Coil fell roughly 8-12 percent since the imposition of export duty on steel and allied products. The HR Coil manufacturers are dropping their offers; however, mills are not receiving solid offers from European consumers.
In the European market, the Hot Rolled Coil prices declined in Q2 2022 due to the limited inquiries, limited transactions, and export restrictions amidst the reduced supplies because of sanctions on Russia. HR Coil prices fell in Russia due to the muted inquiries amidst the reduced supplies because of the sanctions. Since early April, the European Union banned the imports of Russian coal as part of sanctions due to the ongoing war. Furthermore, the sanctions imposed on Russia, coupled with the falling exchange-rate value of the rouble, weak demand, shrinking exports, surplus production, and overall uncertainty, led Hot-Rolled Coil prices to decline in the second quarter of 2022. HRC prices are approaching the pricing floor in the short term, but Russian natural gas outages and the general inflation rate could influence a rebound in flat steel prices.
For the Quarter Ending March 2022
In North America, the Hot-Rolled Coil prices witnessed an inclining trend owing to the tight supply chain and higher input costs during the first quarter of 2022. In contrast, market participants are boosting the hiring of employees to reduce the backlog of unfinished work. Moreover, bulk clients have already secured their needs until May and are waiting for bidding to start in June shipment cargo. Additionally, severe constraints on the supply side raised significant issues as transportation and delays threatened to disrupt operations. However, Import prices for HRC in South America were primarily up amid higher freight rates.
During Q1 of 2022, the HRC market witnessed an upward growth primarily due to inflation in raw materials costs especially coking coal. This soaring in raw materials prices is backed by supply disruption due to extended hostilities between Russia and Ukraine. Amidst it, coal prices have trebled in the quarter and reached USD 600-700/tonne from USD 310/tonne. Applying a strict restriction policy to surge the spread of the pandemic in China and controlling carbon emissions have resulted in sluggish HRC production in China. However, the Indian Steel manufacturers have hiked prices of HRC by USD 18-28 /tonne due to inflation in coking coal costs. Indian Steel market players are highly encouraged regarding HRC export as they have already secured enough stockpiles till May delivery.
Hot-rolled coil prices in the European market increased in the first quarter of 2022 due to solid demand amidst the conflict between Eastern European nations. The ongoing geopolitical conflict between Russia and Ukraine has caused supply chain disruption of various commodities. Russia primarily produces raw materials such as aluminum, copper, coal, and crude oil. In the midst of it all, sanctions imposed on Russia resulted in a blockage in the production and value chain. As a result, rising cocaine prices and imposed sanctions hampered production and supply chains throughout Eastern European nations. Additionally, European steel market players continued to hold back bookings on European-origin HRC due to competitive import offers and complete credit lines.