Big Chinese mills test higher HRC export prices, small sellers still ready to sell low

Big Chinese mills have voiced slightly higher HRC export offer prices this week, banking on the rise in coking coal futures prices and inspections at mines in Shaanxi, as well as generally high costs. However, small mills and traders have kept their offers at the same levels, while some have even given some discounts as they do not believe in an uptrend of prices in the current conditions.

The price range for boron-added SS400 HRC from large Chinese mills has been estimated at $525-535/mt FOB, with a midpoint at $530/mt FOB, up by $3.5/mt since last week. A few large mills like Anshang, Benxi and Rizhao are offering at $525-530/mt FOB today, June 2. “That’s a really good sign. Since the Shaanxi accident, more than 2.56 million mt annual capacity was cut for five working days,” a Chinese source commented. But, generally, market players do not believe in an uptrend even though locally there has been a small price increase as well. “Demand is not so bad yet locally,” a source at one mill said.

At the same time, offers from smaller private mills have been voiced at $500-515/mt FOB, down by $2.5/mt week on week. “Anfeng is still at $505/mt FOB, though theoretically with the hike by the big mills, it should be $510-515/mt FOB. This means smaller sellers do not see the market as rising,” another Chinese source said. Some traders agree to offer at $500/mt FOB if there is a firm bid.

In Vietnam, this week ex-China 2,000 mm Q235 HRC offers with VAT are still at $520-525/mt CFR, but “for non-VAT it is still possible to get below $500/mt FOB”, one more Chinese source said.

Offers for ex-Chinese Q195 HRC through traders to Turkey have posted some decline after the recent holiday - to $550-555/mt CFR, versus $555-560/mt CFR.

In the local Chinese market, HRC futures prices have moved up, exerting a positive impact on the prices in the local spot market. Meanwhile, coke prices have seen rises in the given period, bolstering HRC prices from the cost side. On June 1, major Chinese steelmaker Shagang Group hiked its HRC prices by RMB 100/mt ($15/mt) to RMB 3,700/mt ($542.5/mt) ex-works, for delivery in June, positively affecting the market. However, demand for HRC from downstream users has not seen a significant improvement as the traditional off-season is approaching, which has weakened market sentiments to a certain degree. It is expected that HRC prices in the Chinese domestic market will likely continue to edge up in the coming week, but the pace of the increase will be very limited, in a trend towards stabilization.

Domestic HRC prices in China are at RMB 3,470-3,550/mt ($509-520.5/mt) ex-warehouse on June 2, with the average price level RMB 17/mt ($2.5/mt) higher compared to that recorded on May 27, according to SteelOrbis’ data. 

As of June 2, HRC futures at Shanghai Futures Exchange are standing at RMB 3,399/mt ($498/mt), increasing by RMB 36/mt ($5.3/mt) or 1.1 percent since May 27, while up 0.06 percent compared to the previous trading day, June 1.

$1 = RMB 6.8187