China’s HRC market sees limited activity amid regulatory concerns, awaited stimulus

Although HRC futures prices showed a brief recovery on Monday this week, they declined again on Tuesday, April 22, while spot trading activity in China’s domestic HRC market remained subdued. Export prices from Chinese mills and traders have shown little movement, with some even reflecting a slight downward bias. Meanwhile, trading activity for Chinese HRC exports has remained lackluster this week, as ongoing uncertainty over potential tariffs and stricter enforcement by Chinese authorities against VAT evasion continue to dampen market participation. Additionally, anticipation surrounding the upcoming end-of-April Political Bureau meeting - where stimulus measures are widely expected - has reinforced a cautious, wait-and-see stance across the steel market.

More specifically, offers for ex-China boron-added SS400 HRC from large mills have settled at $460-475/mt FOB, against $465-470/mt FOB last week. Meanwhile, sources noted that, while some mills were targeting higher offers of around $495/mt FOB last week, sentiment has deteriorated this week, with some offers instead reported at lower levels, around $455/mt FOB. At the same time, offers from smaller mills have been voiced at $450-455/mt FOB, down by $5/mt over the past week.

The tradable prices have been reported at $448-455/mt FOB, versus $455-460/mt FOB last week. In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have settled at $466-470/mt CFFR for end of June - July shipments, down by $5-6/mt week on week.

Meanwhile, offers for ex-China SS400 HRC to the Middle East have been estimated at $490-500/mt CFR, down by $5/mt week on week, while offers for ex-China SAE1006 HRC have been estimated at $510/mt CFR UAE. Besides, offers from China for Q195 HRC in Turkey have settled at $483-490/mt CFR, against $490-495/mt CFR last week.

In the meantime, average HRC prices in the Chinese domestic market have moved on a downtrend compared to the previous week amid declining futures prices. Domestic HRC prices in China have settled at RMB 3,330-3,530/mt ($462.5-490/mt) ex-warehouse on April 22, with the average price level RMB 13/mt ($1.8/mt) lower compared to that recorded on April 15, according to SteelOrbis’ data. 

During the given week, inventory levels of HRC have seen gradual declines, reflecting the smooth release of demand. However, decreasing HRC futures prices have weakened market sentiments. The transaction activity for low-priced HRC has been good, while being more difficult for high-priced material. Cautious sentiments still prevail among market players. It is expected that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.

As of April 22, HRC futures at Shanghai Futures Exchange are standing at RMB 3,171/mt ($439.9/mt), decreasing by RMB 65/mt ($9/mt) or 2.0 percent since April 15, while down 0.81 percent compared to the previous trading day, April 21.        

$1 = RMB 7.2074