Chinese HRC exporters become more bullish, supported by futures and local rises

The increasing trend of HRC futures prices in China together with the stronger local market have made Chinese HRC exporters more aggressive in increasing offers this week. Some higher levels have already been accepted by a few customers, though most buyers have kept resisting higher offers, which resulted in a number of deals at lower than mills’ official levels.

At present, export offers for boron-added SS400 HRC from the large Chinese mills are at $660-670/mt FOB, for March and April shipments, with a midpoint at $665/mt FOB, up by $5/mt week on week. Besides, according to sources, some mills like Yangang Steel have increased their offers from $665/mt FOB to $680/mt FOB this week.

Meanwhile, the tradable level for ex-China SS400 HRC has also risen, by $10-20/mt over the past week to $620-650/mt FOB, depending on the destination. “Bids are increasing too, but not as fast as offers,” a source said. Offers for ex-China SS400 HRC have increased to $640-650/mt CFR, versus $610-615/mt CFR at the beginning of last week and to $625/mt CFR at the end of last week. “No deals have been heard so far as most bids are at $620/mt CFR maximum,” a Vietnamese trader told SteelOrbis. Offers to Pakistan have been heard at $670-675/mt CFR, up by $20-25/mt week on week. At the same time, more interest in Chinese materials has been reported in Turkey, with deals for around 40,000 mt in total of ex-China Q195 HRC reportedly done at $670-690/mt CFR through a trader. Furthermore, around 20,000 mt of ex-China SS400 HRC were sold to the UAE at around $655/mt CFR last week, though this week most offers have been reported at levels of $690/mt CFR and above.

In the SAE 1006 HRC segment, a deal for around 20,000-25,000 mt of ex-China material has been reported in Vietnam at $660/mt FOB, which translates to around $670-673/mt CFR, versus offers at $660-670/mt CFR at the beginning of last week. Besides, ex-China offers in Pakistan have settled at around $685/mt CFR, up by $15/mt week on week.

At the same time, during the given week, the consumption of HRC has recovered to normal levels, exerting a positive impact on HRC prices in the Chinese domestic market. Besides, HRC futures prices have indicated an overall uptrend, bolstering market sentiment. Moreover, import iron ore prices have seen an increasing trend, providing support for HRC prices from the cost side. In addition, according to sources, the demand for HRC is expected to be at decent levels in the near future, providing support for further price growth in the coming weeks.

Domestic HRC prices in China are at RMB 4,210-4,350/mt ($614-634/mt) ex-warehouse on February 21, with the average price level RMB 130/mt ($19/mt) higher than that recorded on February 14, according to SteelOrbis’ data.

As of February 21, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,254/mt ($620/mt), increasing by RMB 122/mt ($17.8/mt) or 3.0 percent since February 14.

$1 = RMB 6.8557