Chinese HRC export prices recover slightly as mood locally improves

Following the slump seen in ex-China HRC prices last week, this week has brought some hopes of a recovery given the better mood locally amid expectations for the introduction of stimulus measures at the ongoing meeting in Beijing of China’s top leaders. However, despite some improvement in HRC spot prices locally, export prices have increased only slightly, with most main customers refraining from concluding new deals.

Specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $515-520/mt FOB, with the midpoint at $517.5/mt FOB, the same as at the beginning of last week and up by $2.5/mt since the end of last week. At the same time, smaller mills have been offering their materials at $510-515/mt FOB, compared to $510/mt FOB and slightly lower at the end of last week.

At the same time, the tradable prices for HRC SS400 have been estimated at around $507-515/mt FOB, against $505-515/mt FOB at the beginning of last week and up by $2-5/mt since Friday, July 12. Offers for ex-China SS400/Q235 HRC in Vietnam have been voiced at $520/mt CFR for August shipment, versus $516-518/mt CFR last week. At the same time, according to sources, cheap non-VAT offers for HRC, have disappeared from the market again as inspections of exports have resumed. “The market is flat in China. Prices are up about $5/mt but negotiable as demand remains weak globally,” a Chinese trader said.

Offers for ex-China SS400/Q235 HRC in the Middle East have been estimated at $550-560/mt CFR UAE, the same as last week, while offers to Turkey have been at $550-555/mt CFR.

In the meantime, average HRC prices in the Chinese domestic market have seen slight rises amid increasing HRC futures prices. Domestic HRC prices in China have settled at RMB 3,730-3,810/mt ($523-534/mt) ex-warehouse on July 16, with the average price level RMB 7/mt ($1/mt) higher compared to July 9, according to SteelOrbis’ data. 

During the given week, HRC futures prices have seen some increases, providing support for HRC prices in the spot market. However, downstream users have chosen to conclude HRC purchases against the backdrop of the hot weather during the traditional summer offseason. Steel producers’ production costs are at relatively high levels, which will bolster HRC prices from the cost side. It is thought that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.

As of July 16, HRC futures at Shanghai Futures Exchange are standing at RMB 3,731/mt ($523/mt), increasing by RMB 20/mt ($2.8/mt) or 0.5 percent since July 9, while up 0.05 percent compared to the previous trading day, July 15. 

$1 = RMB 7.1328