Ex-China HRC offer prices have moved up sharply amid surging local prices, which have hit a record high for the period since 2008, and increasing ferrous metal futures prices. As the final announcement for the tax rebate cut has still not been made, sellers from China are ready to export HRC only if sharing the risks with buyers or if the customer will accept all the risk.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $790-850/mt FOB for May shipment, with a midpoint at $820/mt FOB, moving up by $42.5/mt on average compared to late last week.
Some deals, according to sources, for ex-China SS400 grade HRC were heard at $780-790/mt FOB last week to distant markets like South America. This has been assessed as a quite high level for the current market conditions and in the major outlet, Asia, the tradable value is $760-765/mt FOB for ex-China SS400. This means that the workable level has added $25-30/mt from last week.
Offers for rerolling SAE1006 HRC from China have been limited, with mills targeting not less than $850/mt CFR in Vietnam. Offer prices of ex-India SAE1006 HRC to Vietnam have increased to $810-840/mt CFR Vietnam after a sale at $805/mt CFR, indicating a rising trend.
“HRC prices [in the local market] have hit the highest level since 2008, while ferrous metal futures prices have indicated an overall rising trend, exerting a positive impact on market players’ sentiments, though buyers and sellers in the export market still await accurate news on the export tax rebate,” an international trader told SteelOrbis. For now, as there is no information on the extent the export tax rebate will be cut (from the current 13 percent to nine percent or to four percent or fully cancelled), Chinese exporters are negotiating a 50:50 share of risks with some buyers, but are mostly trying to deal only if buyers accept all the risks of possible tax rebates changes.
During the given week, rising ferrous metal futures prices have pushed up local Chinese HRC prices. Meanwhile, inventory of HRC has been at relatively low levels, bolstering prices.
Domestic HRC prices in China are at RMB 5,290-5,320/mt ($806-811/mt) ex-warehouse on March 30, with the average price level RMB 255/mt ($39/mt) higher as compared to March 23, according to SteelOrbis’ data. Compared with the price level on Monday, March 29, local quotations are RMB 50/mt ($7.6/mt) higher.
As of March 30, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,372/mt ($819/mt), increasing by RMB 244/mt ($30.3/mt) or 4.76 percent since March 23.
$1 = RMB 6.5641