Better sentiments in the Chinese market amid positive expectations for the real estate sector have pushed up ex-China HRC prices again this week, though local prices have not improved.
Chinese exporters have increased their offer prices for HRC and CRC, increasing HRC offer prices to $470-480/mt FOB and CRC offer prices to $525-530/mt FOB, up $5/mt and $2.5/mt, respectively compared to December 12.
“The supply and demand in the overseas steel market will likely be in a balanced situation in 2020, while there are signs of recovery in several sluggish markets [like India], which will narrow the price gap between ex-China offer prices and exert a positive impact on China’s exports,” an international trader told SteelOrbis. “China will increase imports of semis and exports of high-end products in the coming year,” he added.
At its Central Economic Work Conference in Beijing, the Chinese government stated, “China will work harder to ensure housing for the poor in cities, upgrade urban areas and lower existing housing stock, carry out renovation of old residential areas in cities and towns, and vigorously develop rental housing, while houses should be for living in and not for speculating. China will fully implement the long-term management and regulation mechanism that ensures the stability of land prices, housing prices, and expectations through city-specific policies, and promote the steady and sound development of the real estate market.” However, the communique of the Central Economic Work Conference did not include the statement made at the meeting of the political bureau of the central committee of the Communist Party of China (CPC) in the middle of this year that “China will not use real estate as a means to stimulate the economy in the short term”. This signals a relaxation of restrictions on the real estate market in China. Accordingly, market participants and investors think that the real estate sector in China may perform better in 2020 than in 2019.
Positive sentiments also started to prevail in the Chinese local HRC market amid the improved expectations for the domestic real estate sector. Average local HRC prices in China have increased by RMB 60/mt ($8.5/mt) week on week to RMB 3,865/mt ($550/mt) ex-warehouse.
HRC futures prices at Shanghai Futures Exchange (SHFE) are standing at RMB 3,732/mt ($531/mt) on December 13, down RMB 25/mt ($3.6/mt) or 0.67 percent from December 12, following increases over seven consecutive days.
