Chinese HRC exporters become even more bullish, supported by local rises

The increasing trend of HRC futures prices together with the stronger local market have made Chinese HRC exporters even more aggressive in increasing offers. Some higher levels have already been accepted by a number of customers, but overall trading volumes have remained small as customers have remained cautious and have only been forced to accept an increase due to the absence of firm offers from other major Asian exporters, SteelOrbis has learned from the market on December 13.

At present, export offers for boron-added SS400 HRC from the major large Chinese mills are at $580-600/mt FOB, for February shipment, with a midpoint at $590/mt FOB, adding another 20/mt week on week. “Prices have increased by $20/mt [in general] early this week. Some mills like Angang and Benxi who were offering at $575/mt FOB last week are asking for $600/mt FOB now,” a local trader said. Smaller mills like Anfeng have also increased prices, offering SS400 HRC at $575/mt FOB versus last week’s $555-560/mt FOB. The end of the severe Covid-19 restrictions and low stocks in market have been among the major reasons for the continuation of the uptrend.

The tradable level for ex-China SS400 HRC has also risen - by $15-20/mt over the past week to $570-580/mt FOB. “Bids are increasing too, but not as fast as offers,” a source said. At this level, some small-volumes deals have been reported to Pakistan, South Korea and Vietnam. Vietnamese customers have been mainly bidding at $570-575/mt CFR for SS400 coils against offers at $585-600/mt CFR. But on Tuesday, there have been reports that a few deals at $580-585/mt CFR have already been done to Vietnam.

In the SAE1006 segment, Chinese suppliers have also been bullish, but very few deals have been confirmed at higher levels. For instance, offers for SAE1006 HRC to Vietnam have been starting from $600/mt CFR, but are mainly at $620/mt CFR from most major suppliers. Customers are ready to accept $580-585/mt CFR for SAE1006 HRC in Vietnam, but mills are insisting on not below $600/mt CFR with some limited volumes sold at this level. In Pakistan, offers for SAE1006 coils have also reached $615-620/mt CFR.

During the given week, HRC prices in the Chinese domestic market have indicated strong rises amid the lifting of Covid-19 restriction measures. HRC futures prices have moved up, exerting a positive impact on prices in the spot market. At the same time, Chinese major steelmaker Baowu Group raised its HRC prices by $28.7/mt for delivery in January, positively affecting the market mood. However, demand for HRC has been at a reduced level, while downstream users have been unwilling to build up stocks for the winter. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 4,000-4,160/mt ($574-597/mt) ex-warehouse on December 13, with the average price level RMB 103/mt ($15.0/mt) higher than that recorded on December 6, according to SteelOrbis’ data. 

As of December 13, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,032/mt ($579/mt), increasing by RMB 112/mt ($16.1/mt) or 2.9 percent since December 6.

$1 = RMB 6.9746