Ex-China HRC prices from mills still fall, traders’ prices stable or higher

This week has started with some rather unusual movement in the Chinese HRC market, with steel mills still dropping their export offers despite some rebounds seen in local and futures prices, while Chinese traders, on the other hand, have decided to maintain their prices or even raise them.

At present, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $565-605/mt FOB, with the midpoint at 575/mt FOB, down by $25/mt compared to offers last week. “Offers from Shagang Steel Group have dropped by $10/mt to $605/mt FOB. Benxi Steel is offering at $600/mt FOB, while producers like Baogang and Baotou are offering at $565/mt FOB,” a market insider said.

Meanwhile, despite the continuous decreases seen in HRC export offers from big Chinese mills, at the beginning of this week signs of recovering prices from Chinese traders have emerged in the market, given the slight gains in futures prices for HRC. Thus, the tradable level for ex-China SS400 HRC has settled at $550-580/mt FOB, versus $530-570/mt FOB last week, with the lower end of the range corresponding to offers in Vietnam at $560-570/mt CFR, up by around $20/mt week on week, which have already been fixed in a few deals. At the same time, several deals for ex-China HRC have been reported in India at $620/mt CFR. Besides, offers for ex-China material have been reported in Turkey at $595-600/mt CFR, versus $580-585/mt CFR last week. Buyers in the Middle East have also reported some ex-China SS400 HRC offers at $630/mt CFR, up by $10-20/mt week on week.

In the SAE1006 HRC segment, offers from Chinese suppliers have been relatively stable so far. In Vietnam, ex-China SAE1006 coils have been offered at $610-615/mt CFR, the same as last week, with several bids still heard at still $595/mt CFR levels. Besides, according to market insiders, Pakistani buyers have been looking to purchase ex-China HRC at $565/mt CFR.

During the given week, HRC futures prices in China moved down first, while they have bottomed up since May 8 following declines in production volumes. However, inventories of HRC are at relatively high levels, signaling that local demand has not seen any significant improvement yet, resulting in cautious sentiments still prevailing among market players. It is expected that HRC prices in the Chinese domestic market may weaken again in the coming week following the recent rises.

Domestic HRC prices in China are at RMB 3,850-4,090/mt ($556-591/mt) ex-warehouse on May 9, with the average price level RMB 136/mt ($19.7/mt) lower compared to that recorded on April 25, according to SteelOrbis’ data.

As of May 9, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,774/mt ($545/mt), rising by RMB 22/mt ($3.2/mt) or 0.6 percent since April 25.

$1 = RMB 6.9255