Weak demand in Turkey, Russian HRC prices will be under pressure

Since the outbreak of the Russia-Ukraine conflict, Turkey has replaced Europe as the main market for Russian HRC. Demand in Turkey has been sluggish recently, after scrap prices continued to weaken, and Russian mills had to cut their offers to match buyers’ lower and lower price expectations.
However, due to the different degrees of sanctions imposed on various steel mills in Russia, the current steel price difference is relatively large. After investigation, the current export quotation of Russian hot-rolled coil is 580-620 US dollars / ton FOB Black Sea. The mainstream transaction price should be around $600/ton, down $140/ton month-on-month.
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Turkish scrap continued to weaken before, and the ex-factory price of HRC fell below $700/ton. The current import price of Turkey’s HMS 1/2 (80:20) is $360/ton, down $100/ton month-on-month. Affected by this, the ex-factory price of HRC in Turkey fell to US$690-720/ton, a month-on-month decrease of US$80-110/ton.
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European coil may maintain production cut expectations
With the recent decline in coil prices and the support of electricity costs, it is difficult for steel mills to boost profits, and most steel mills in Europe will cut their production capacity. ArcelorMittal, the world’s second-largest European steel mill, has opted to shut down its electric arc furnaces on an hourly basis due to high energy prices and shut down a blast furnace in Dunkirk, France.
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