Ex-China HRC prices fall again amid lack of local and overseas support, further drop doubtful

Following a drop in ex-China HRC quotations last week, this week has brought another fall in offers. In addition, traders have continued to offer cheaper HRC position cargoes to the export market at much lower prices, though trade has remained limited amid generally slow demand globally. However, according to sources, prices are unlikely to keep falling following news about China’s central bank unexpected cut of key policy rates to boost a sputtering economic recovery.

At present, export offers for boron-added SS400 HRC given by major Chinese mills have come to $560-580/mt FOB, with a midpoint at $570/mt FOB, down by $5/mt over the past week. “Most mills have lowered their offers slightly, like Shagang from $580/mt to $570/mt FOB, but some mills like Benxi still resist the downtrend and maintain their prices high at $590/mt FOB, which is unworkable,” a market insider said.

Meanwhile, the tradable level for ex-China SS400 HRC has been heard at $535-555/mt FOB, down by $5-10/mt week on week, with the lower end of the range corresponding to deal prices in Vietnam at $543-545/mt CFR, down by $5-10/mt over the past week. Meanwhile, ex-China SAE1006 HRC prices have dropped in Vietnam as well, to $570-580/mt CFR, versus $580/mt CFR last week, with a deal for around 20,000 mt reported to have been signed at $570-575/mt CFR, though this information has not been confirmed by the time of publication. At the same time, ex-China SS400 HRC offers have dropped in Pakistan by $10-15/mt week on week to around $560/mt CFR, while ex-China offers in the Middle East and Turkey have been reported at $580-600/mt CFR and $580-585/mt CFR, respectively, down by around $10/mt over the past week.

“Most buyers are refraining from new purchases mainly due to slow demand in all main trade destinations coupled with their expectations for a further downtrend, but, on the other hand, many Chinese suppliers actually do not believe in a further price fall, and some even expect a rebound, with China cutting key policy rates and reducing production levels,” a market insider told SteelOrbis. 

At the same time, during the given week, HRC prices in the Chinese domestic market have seen a declining trend amid decreasing HRC futures prices, slack demand from downstream users, and increasing inventory levels. However, major Chinese steelmaker Baosteel raised its HRC prices by RMB 100/mt ($14/mt) for September delivery, signaling bullish sentiments as regards the future prospects for the HRC market in the coming peak season. 

Domestic HRC prices in China are at RMB 4,030-4,040/mt ($561-563/mt) ex-warehouse on August 15, with the average price level RMB 60/mt ($8.4/mt) lower compared to August 8, according to SteelOrbis’ data. 

As of August 15, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,924/mt ($546.5/mt), decreasing by RMB 24/mt ($3.3/mt) or down by 0.6 percent since August 8. 

$1 = RMB 7.1768