Chinese hot rolled coil (HRC) export offers have indicated sharp decreases compared to last week. The worsening coronavirus situation worldwide has resulted in a critical situation in more countries, exerting a negative impact on market players’ sentiments.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $440-445/mt FOB for late May delivery, versus $460-470/mt FOB reported on March 17. At the same time, the latest deals have been heard at $430/mt FOB for small quantities to Pakistan, Southeast Asia and South America. The tradable level has dropped by $20-25/mt compared to last week. “The continuously worsening coronavirus situation has negatively affected the global HRC market due to the slackening demand for HRC from overseas downstream users,” an international trader told SteelOrbis.
At the same time, competition has also increased with more suppliers interested in export sales. As a result, Chinese prices have not been the most competitive so far. Offers for ex-China SAE1006 are still at $450/mt CFR Vietnam or just $5/mt below. But there are still lower prices available from some Indian suppliers. Offers for SAE1006 HRC from India have been heard at $435-440/mt CFR in Vietnam, while even $430/mt CFR level has been heard from some traders for ex-India material. Moreover, there have been more offers for ex-CIS HRC in Vietnam. Offers for ex-Russia coils after a long break have returned to Vietnam at $430/mt CFR, while offers for ex-Ukraine HRC have been at $430-440/mt CFR Vietnam this week. Prices from Japan have been heard at $465/mt CFR Vietnam
During the given week, HRC futures prices at Shanghai Futures Exchange (SHFE) have seen a sharply declining trend amid the slump in the global financial markets due to the rapid spread of the coronavirus. Meanwhile, inventories of HRC are still at relatively high levels, resulting in some traders selling at lower prices to bring in cash and avoid potential risks. Domestic HRC prices in China are at RMB 3,330-3,400/mt ($469-479/mt) ex-warehouse on March 24, with the average price level RMB 95/mt ($13.4/mt) lower as compared to March 17, according to SteelOrbis’ data.
As of March 24, HRC futures at the Shanghai Future Exchange are standing at RMB 3,329/mt ($469/mt), decreasing by RMB 169/mt ($23.8/mt) or 4.83 percent since March 17.
Taking into account weak demand for HRC elsewhere, some Indian HRC suppliers have started to seek customers in China, the only market which has started to see demand improvements after the coronavirus outbreak. Nevertheless, there has been no report of any deals.
$1 = RMB 7.0999