Ex-China HRC offers stable, but tradable level weaken on bearish mood locally

Ex-China HRC prices have moved sideways compared to the previous week, though the sentiment has been worsening given slow demand globally with the tradable level decreasing slightly as the local market has been still weak and bids have been lower.

At present, export offers for HRC given by major Chinese mills are at $555-565/mt FOB for mainly September shipment, same as last week, with several offers from big mills, like Benxi Steel still heard at $575/mt FOB and considered by buyers as unacceptably high. “Shagang has been still offering HRC at $555/mt FOB, but this level is hardly workable in the market,” an international trader said. 

At the same time, the tradable level for ex-China SS400 HRC has been estimated at $525-540/mt FOB, down by 5-10/mt week on week, with the lower end of range corresponding to ex-China offers in Vietnam. In particular, most offers for ex-China SS400 and Q195 HRC have been heard at $535-540/mt CFR, versus $545-550/mt CFR at the beginning of last week, while ex-China offers for SAE1006 HRC from traders have been heard at $570/mt CFR, down by $5/mt week on week, with bids already heard at $560/mt CFR. According to sources, around 5,000 in total of ex-China materials have been sold in Vietnam at $535/mt CFR for Q235 and at $550/mt CFR for Q355 HRC.

Furthermore, ex-China SS400 and Q195 HRC have been offered in Turkey at $580-590/mt CFR, down by $10/mt over the past week, with no deals have been reported so far, but according to sources, “talks are underway”. Besides, ex-China offers in the Middle East have been estimated at $590-600/mt CFR from traders and at $620/mt CFR from mills, same as last week.

Average HRC prices in the Chinese domestic market have moved down amid the slack demand from downstream users due to the high temperature. 

During the given week, demand for HRC has been sluggish in the traditional offseason of hot summer, while HRC producers’ supply indicated a limited amount of contraction. Meanwhile, HRC futures prices moved on a downtrend, negatively affecting HRC prices in spot market. At the same time, import iron ore prices have seen declines compared to the previous week, weakening the support to HRC prices from cost side. It is expected that HRC prices in the Chinese domestic market will edge down slightly in the coming week. 

Domestic HRC prices in China are at RMB 3,860-3,980/mt ($537-554/mt) ex-warehouse on July 11, with the average price level RMB 40/mt ($5.6/mt) lower compared to that recorded on July 4, according to SteelOrbis’ data. 

As of July 11, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,782/mt ($526/mt), decreasing by RMB 84/mt ($11.7/mt)since July 4.

$1 = RMB 7.1886