China’s HRC export market remains volatile with mixed pricing strategies

China’s HRC export market has continued to show mixed sentiments this week. Leading mills have remained cautious, either holding back from issuing new offers or keeping them stable, while further maintenance activities are likely in July or August. Meanwhile, offers from smaller mills and traders have varied widely depending on the supplier and destination - some are maintaining stable prices, while others are offering significant discounts.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have remained at $445-460/mt FOB, with a midpoint at $452.5/mt FOB, the same as last week. Meanwhile, smaller mills have been offering their HRC at around $440-445/mt CFR, up by $2/mt on the lower end of the range week on week. “Market dynamics remain in line with June’s trends: blast furnace mills are operating at stable utilization rates, but sluggish demand is leading to only a minor accumulation of physical inventories,” a market insider told SteelOrbis, adding, “Overall, the export market remains tight and unpredictable, making the near-term outlook challenging to assess.”

In the meantime, the tradable price for ex-China SS400/Q235 HRC has been estimated at $430-445/mt FOB, compared to $435-443/mt FOB last week. In particular, ex-China SS400 HRC offers from non-VAT traders in the UAE have been reported at $460-465/mt CFR, down from $465/mt CFR last week, while offers from other traders and mills have been estimated at $470-480/mt CFR, the same as last week.

Besides, according to sources, a deal for ex-China Q195 HRC is reported to have been signed in Turkey at $458-459/mt CFR last week, while most offers for ex-China Q195 HRC in Turkey have been voiced at $465-470/mt CFR, the same as last week.

Meanwhile, offers for ex-China Q235 HRC in Vietnam have settled at around $452/mt CFR, against $453-458/mt CFR at the beginning of last week, while bids have been reported at $450/mt CFR.

In the meantime, average HRC prices in the Chinese domestic market have indicated slight rises compared to the previous week. In particular, domestic HRC prices in China have settled at RMB 3,230-3,470/mt ($451-485/mt) ex-warehouse on July 1, with the average price level RMB 6/mt ($0.8/mt) higher compared to June 25, according to SteelOrbis’ data. 

In June, the purchasing managers index (PMI) for the Chinese steel sector was at 45.9 percent, 0.5 percentage points lower than that recorded in May this year, as announced by the China Steel Logistics Committee (CSLC), which is part of the China Federation of Logistics and Purchasing (CFLP).  Meanwhile, the pace of social inventory consumption slowed down from the previous month, exerting a negative impact on market sentiments. High temperatures in the summer and heavy rains in some regions of China have negatively affected the HRC market.

The news of resumption of production of coking coal and coke on June 30 has hit prices, while undermining the support for HRC prices from the cost side. Market analysts forecast that the apparent consumption of steel in July may see a year-on-year decrease of eight percent, which will weaken the support for steel prices. There have been rumours about production halts in the steel market, which may attract the attention of market players in the coming period.

As of July 1, HRC futures at Shanghai Futures Exchange are standing at RMB 3,136/mt ($438/mt), increasing by RMB 38/mt ($5.3/mt) or 1.2 percent since June 25, while increasing by 0.06 percent compared to the previous trading day, June 30.          

$1 = RMB 7.1534