Chinese HRC exporters attempt price increases despite limited demand

Ex-China hot rolled coil (HRC) offer prices have edged up amid the rising trend of local and futures prices coupled with the increased strength of the Chinese currency against the US dollar. Besides, the tradable level has increased as well, even though demand has remained slow in almost all main destinations.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $525-550/mt FOB for January shipment, with a midpoint at $537.5/mt FOB, up by $12.5/mt week on week. “Offers from Rizhao Steel are at $530/mt FOB, offers from Angang are at $545/mt FOB, offers from Yanshan, Bengang and Shagang are at $550/mt FOB, while some like Anfeng are still offering at $525/mt FOB,” a market insider said.

At the same time, the tradable level for SS400 HRC has been heard at $515-535/mt FOB, depending on the destination, up by $15-25/mt over the past week. The lower end of the range corresponds to ex-China offers in Vietnam, standing at $530-535/mt CFR, compared to last week’s offers at $510-520/mt CFR. “We have not heard any new deal signed in Vietnam, as most bids are at $510/mt CFR,” a market insider said. Offers to Pakistan have increased by $25-35/mt week on week to $555-565/mt CFR. Besides, ex-China SS400 HRC offers have also been heard in the Philippines at $540/mt CFR.

In the SAE 1006 HRC segment, offers prices have increased as well. Offers to Vietnam have increased to $550-560/mt CFR, up by $10-20/mt week on week, though some rare offers are still heard at last week’s level. New offers for Chinese SAE1006 HRC to the Middle East have been heard at $580/mt CFR, compared to $560-570/mt CFR last week. Furthermore, market insiders have been discussing a deal for around 50,000/mt of ex-China HRC sold to India at $560-570/mt CFR last week, though this information has not been confirmed by the time of publication.

During the given week, HRC prices in the Chinese domestic market have moved up amid the improved sentiments among market players due to the easing of control measures against the Covid-19 pandemic. Meanwhile, HRC futures prices have moved up, exerting a positive impact on HRC prices in spot market. Moreover, China has issued policies to boost the real estate industry, for instance, meeting needs for reasonable financing and treating state-owned and private enterprises equally, which has bolstered market players’ sentiments as regards the future prospects for the real estate market. Demand for steel is also expected to improve. However, the demand for HRC will likely slacken in the coming months considering the traditional weak demand during the winter.

Domestic HRC prices in China are at RMB 3,740-3,940/mt ($531.0-560.0/mt) ex-warehouse on November 15, with the average price level RMB 100/mt ($14.2/mt) higher as compared to November 8, according to SteelOrbis’ data.

As of November 15, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,780/mt ($537/mt), rising by RMB 135/mt ($19.2/mt) or 3.7 percent since November 8.

$1 = RMB 7.0421