On Wednesday, May 19, major steel futures in China have fallen again by almost 4 percent, indicating a weakening outlook of the local steel market for the near future. As a result, low-priced HRC export offers from traders in China have persisted and market sources believe that mills may also offer some more competitive prices soon. In addition, China is losing its dominant role in the import billet market and billet purchases are unlikely to recover in the short term, SteelOrbis learned from market sources.
Average local HRC price in China has gone down by RMB 95/mt ($15/mt) today, coming to RMB 6,015/mt ($936/mt) ex-warehouse. However, in some parts of China prices have fallen to much below RMB 6,000/mt ex-warehouses. There have been talks in the market that production restrictions in the north will be eased by the end of this month, which will increase supply in the market. At the same time, consumption is not going to go up any more. Most sources believe that HRC prices in China will keep seeking lower levels, and, as a result, this may push up exports.
Official offers for SS400 coils from Chinese mills have declined by $15/mt on average to $1,010-1,060/mt FOB. But at the same time, traders and some smaller mills have already been considering to sell at below $1,000/mt FOB. The tradable value has come to $965-970/mt FOB for SS400, according to sources.
Prices for position SAE1006 HRC cargoes have kept going down in Vietnam. After a deal at $1,010-1,015/mt CFR for position cargo from China, offers have been reported at $995-1,005/mt CFR for SAE coils.
Steel mills in Tangshan have reduced their billet prices by RMB 170/mt ($26/mt) today and by RMB 240/mt ($37/mt) over the last two days, to RMB 5,300/mt ($825/mt) ex-works. This means that the highest possible tradable level for billet in China is not above $730/mt.
Offers for ex-ASEAN billet have been reported at $760/mt CFR to China this week. However, on Tuesday, rare bids were not above $720/mt CFR, according to sources. “China lost its position of the market driver,” a trader said. Most sources do not believe that China will resume imports in the coming one or two weeks.
In Southeast Asia, offers have been mainly heard at $760-770/mt CFR, while buyers have been bidding at $750/mt CFR. Negotiations for Indian IF billet have been held at $740-745/mt CFR.
$1 = RMB 6.4255