Though most Chinese hot rolled coil (HRC) suppliers were trying to push up export prices last week, this week sentiments have worsened in the market. Thus, ex-China HRC offer prices have moved down amid the decreasing trend in local prices and HRC futures prices caused by a sharp rise in new Covid-19 cases and weaker economic results in China.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $840-860/mt FOB for May shipment, with a midpoint at $850/mt FOB, moving down by $40/mt compared to March 8. “The worsening Covid-19 pandemic and stricter controlling measures have negatively affected the HRC market,” an international trader told SteelOrbis. However, market participants said that some HRC offers from big mills are still heard at around $880/mt FOB, mainly because these mills have not updated their new offers, and because “the drop is too sharp, so not all are fast enough to follow it”.
At the same time, the tradable level for SS400 has been heard at $810-840/mt FOB, moving down by $40-55/mt week on week, while the workable price level for SAE1006 HRC from Chinese small mills and traders has been reported at around $860-870/mt FOB, down $30-40/mt week on week. In particular, after signing numerous deals for SS400 HRC at $870/mt CFR Vietnam last week, this week ex-China SS400 HRC suppliers have decreased their offers to $850/mt CFR, and some offers have already been voiced at $840-843/mt CFR, according to sources. Besides, a deal for around 10,000 mt of SS400 HRC have been signed with a Vietnamese buyer at $820/mt FOB (around $855/mt CFR) this week. Meanwhile, Pakistani buyers have reported about a deal for ex-China SS400 HRC at $890/mt CFR, while ex-China offers for SAE1006 HRC have been voiced at around $900/mt CFR Pakistan, down $30/mt week on week. However, Chinese HRC suppliers who managed to sell their materials to Turkey at $990-1,000/mt CFR last week are still offering their SS400 HRC at around $990-1,010/mt CFR Turkey this week.
During the given week, HRC prices in the Chinese domestic market have indicated big declines amid the impact of the Paralympic Games and the two government sessions (NPC & CPPCC). Meanwhile, HRC futures prices have indicated sharp decreases, exerting a negative impact on the spot market. At the same time, the worsening of the Covid-19 pandemic in many regions of China has also weakened the support for the HRC market. However, major steelmaker Baosteel previously raised its HRC prices by RMB 200/mt ($31.6/mt) for April, which will bolster the prices in the spot market. It is thought that HRC prices will likely fluctuate within a limited range in the coming week.
Domestic HRC prices in China are at RMB 4,930-5,180/mt ($773-812/mt) ex-warehouse on March 15, with the average price level RMB 230/mt ($36/mt) lower as compared to March 8, according to SteelOrbis’ data.
As of March 15, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,932/mt ($773/mt), decreasing by RMB 288/mt ($45.1/mt) or 5.5 percent since March 8.
$1 = RMB 6.376
