China’s HRC export trade slow to restart, pessimism outweighs optimism

The Chinese hot rolled coil (HRC) market has resumed work after its long holiday which started on February 17. However, even though it is unusual for the start of a post-holiday period, HRC futures prices have already posted slight declines amid weak trading and expectations for any significant improvement to be seen only in March.

More specifically, several large Chinese HRC mills that have returned to work have kept offers stable at around $470-480/mt FOB, with a midpoint at $475/mt FOB, the same as two weeks ago. However, offers from smaller private mills have remained at around $465-475/mt CFR, the same as last week. “Most Chinese mills have yet to return with fresh offers. While some market participants anticipate new quotations later this week, others believe they may come only next week,” a source told SteelOrbis, noting, “Sentiment remains weak amid falling futures prices.”

At the same time, offers from Chinese traders have been voiced at $460-470/mt FOB, down by $5/mt on the lower end of the range over the past two weeks, as some traders have decided to go lower to attract buyers. Ex-China 2,000 mm Q235 HRC offers in Vietnam are still rare due to the absence of non-VAT offers, with indicative offers with VAT for April shipment voiced at $485-490/mt CFR Vietnam this week, though offers for ex-China Q195 HRC have been voiced at $475/mt CFR Vietnam, down by $5/mt.

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have settled at around $500/mt CFR UAE, depending on the supplier, the same as last week, but most customers have still been reporting workable price levels at $490-495/mt CFR UAE. In addition, Chinese Q195 HRC offers through traders to Turkey have been estimated at $498-503/mt CFR, versus $500-505/mt CFR before the holiday.

“The local market remains in a holiday mood, with most prices staying flat or adjusted by around RMB 10/mt. The export market has only just resumed activity, and most mills have not updated new base prices yet,” a Chinese source said.

Meanwhile, domestic HRC prices in China have settled at RMB 3,280-3,390/mt ($473-488.5/mt) ex-warehouse on February 24, with the average price level RMB 3/mt ($0.4/mt) lower compared to that recorded on February 10, according to SteelOrbis’ data. 

On the first trading day after the long holiday, transaction activities in the local HRC market have not resumed yet. Demand from downstream users may need more time to recover. It is thought that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.

As of February 24, HRC futures at Shanghai Futures Exchange are standing at RMB 3,195/mt ($463/mt), decreasing by RMB 25/mt ($3.6/mt) or 0.8 percent since February 10, while decreasing by 0.87 percent compared to the previous trading day, February 13.

$1 = RMB 6.9414