The growing gap between high Chinese local hot rolled coils (HRC) prices and falling international quotations led to extraordinary situation – Russian HRC has been offered by trader to China.
On Thursday, October 10, an offer of Russian-origin rerolling HRC was heard at RMB 3,550/mt ($502/mt) CFR. It is equivalent to $430/mt CFR, excluding 13 percent of VAT, 2.5 percent import tax and port charge, SteelOrbis was informed. Moreover, some sources said that the deal has already been done for shipment in late December in Southern China, but a number of sources denied that the contract was concluded. Comparing the given price with the average of local HRC quotations in the Southern part of China, which is RMB 3,780/mt ($535/mt) ex-warehouse, according to SteelOrbis, the import coils have been by $33/mt cheaper. Even considering further transportation costs for import HRC, the gap is quite big.
Traders are considering making import HRC transactions, while those shipmetns will be to southern China due to lots of producers in the north, according to sources. But the main concern for import will be still high competition with local sellers. “News about the imports will force domestic producers to lower domestic prices,” a trader said. Moreover, growing HRC capacities in China will add to the situation as big local producers will have to fight for domestic sales. In 2019-2020, about 30 million mt of new HRC capacities will be launched in China.
Russian HRC suppliers have been actively offering and selling to Vietnam over the past few months with offers for big coils being heard to Vietnam at $425-430/mt CFR this week. At the same time bids have been coming at $420/mt CFR. As sentiments in the Asian HRC market have stayed bearish so far, Russian mills have been trying to close order books for December as soon as possible.
