Ex-China HRC prices stable as fluctuating futures exert pressure, mood still upbeat

Ex-China HRC prices have mainly moved sideways over the past week, with only small corrections reported from mills amid still unclear trend of HRC futures prices. At the same time, many Chinese suppliers have been refraining from new offers, emphasizing slow trade in the current market conditions, coupled with hopes that the uptrend will resume later next month.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $555-565/mt FOB, with the midpoint at $560/mt FOB, down by $2.5/mt week on week, while some offers from several big mills have been still heard at $570/mt FOB and above levels, but are considered at “unworkable”. “It is hard to make business as there is no clarity so far, but for example today we have seen some rebound in China again, so maybe next month will be better,” a market insider said.

At the same time the tradable level for ex-China SS400 HRC has been heard at $540-550/mt FOB, same as last week. More specifically, ex-China SS400 HRC offers in Vietnam have been reported at $550/mt CFR, on Tuesday, June 27, same as last week, though lower offers at $535- 545/mt CFR were heard by Vietnamese customers earlier this week and at the end of last week. Meanwhile, Chinese offers to the Middle East and Turkey have been rare this week given the holidays in both markets, with the indicative offers standing at $590-600/mt CFR, same as last week.

Average HRC prices in the Chinese domestic market have moved on a downtrend amid the large-scale heavy rains in eastern and southern China and high temperature in northern China.

During the given week, demand for HRC has remained slack due to the rainy season in eastern and southern China and high temperature in northern China. Meanwhile, the Dragon Boat Festival holiday exerted a negative impact on the demand for HRC. The exports of HRC decreased in May, increasing the pressure on the Chinese domestic HRC market. At the same time, raw material prices edged down, weakening the support to HRC prices from cost side. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 3,790-3,980/mt ($526-552/mt) ex-warehouse on June 27, with the average price level RMB 70/mt ($9.7/mt) lower compared to that recorded on June 20, according to SteelOrbis’ data.

As of June 27, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,835/mt ($536/mt), decreasing by RMB 1/mt since June 20.

$1 = RMB 7.2098