Chinese hot rolled coil (HRC) export offers have increased slightly during the past week ending November 26, supported by higher prices in the local market and still firm demand. However, the recent decline in futures prices in China and expectations of a slowdown in demand in December may signal that the uptrend in the Chinese export market is nearing its end.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $455-460/mt FOB, while the lower end of the range has increased by $5/mt from November 19. One Chinese producer from the north was in the market with offers at $459/mt FOB on Tuesday, while most sources said that it is hard to get $455/mt FOB from Chinese mills at the moment.
Ex-India HRC SAE1008 offers are at $460/mt CFR Vietnam, while a deal has been signed at $455-460/mt CFR early this week, sources confirmed. Though prices increased, Indian HRC prices have been among the most competitive. Last week, transactions were heard at $455/mt CFR at the highest. At the same time, Chinese traders can offer SAE1008 at $470/mt CFR Vietnam, with Chinese mills offering at up to $500/mt CFR, much higher than other suppliers. “Japan-origin HRC is offered at $480/mt CFR Vietnam [for SAE1008],” a trader told SteelOrbis.
Chinese producers have given higher offer prices in the international market due to the upward momentum in their domestic market amid good demand. During the past week, domestic HRC prices in China have increased to RMB 3,700-3,880/mt ($526-552/mt) ex-warehouse, with the average price level RMB 80/mt ($11.4/mt) higher as compared to November 19, according to SteelOrbis’ data.
Meanwhile, the increases in raw material prices have provided some support. The provinces of Hebei and Shandong have announced that they will shut down 14 coke plants due to environment-related issues. Accordingly, as of November 26, coke plants in Shandong Province raised their ex-works prices for coke by RMB 50/mt ($7.1/mt). At the same time, iron ore prices have also risen, reaching $90.6/mt CFR on November 25 before recording some retreat on November 26.
HRC futures prices at Shanghai Futures Exchange (SHFE) are standing at RMB 3,533/mt ($502/mt) on November 26, up 0.9 percent from November 19. However, they lost 0.84 percent or RMB 33/mt ($5/mt) from November 25, signaling weaker sentiments in the market. As most major mills have attempted to increase HRC output to the highest allowed level, seeing strong demand, and as restocking in the domestic market is near its end, the price trend may reverse soon, market participants believe.