Chinese HRC exporters lose confidence amid declines locally and ongoing futures fluctuations

Although HRC futures prices have been showing slight rises during the first days of this week, sentiments have been more negative than positive, with most offers from Chinese suppliers decreasing slightly, as average HRC prices in the Chinese domestic market have decreased due to the fluctuation of HRC futures prices following the previous rapid rises.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have been voiced at $525-540/mt FOB, with a midpoint at $532.5/mt FOB, down by $5/mt week on week. “Some market sources say that offers at $550/mt FOB still exist, which is very doubtful, and, in any case, this level is unworkable,” a Chinese trader told SteelOrbis. Meanwhile, offers from smaller mills have been estimated at $515-525/mt FOB, against $515-530/mt FOB last week.

The tradable prices for Chinese origin SS400/Q235 and Q195 HRC have been estimated at $515-525/mt FOB, the same as last week. Offers for ex-China Q235 HRC have been heard at $530/mt CFR, the same as last week, while offers in Pakistan have been voiced at $540-545/mt FOB.

Offers in the Middle East have been reported at $550-560/mt CFR, against $570-575/mt CFR reported a few days ago. Besides, according to sources, a deal for around 45,000 mt of SS400 HRC is reported to have been signed in the Middle East at $555/mt CFR this week.

In the meantime, major Chinese steelmaker Baosteel decided to raise its local base prices for hot rolled coil (HRC) by RMB 500/mt ($71/mt) for delivery in November, exerting a positive impact on market sentiments. However, HRC prices in the Chinese domestic market had indicated sharp increases in recent days, following by downward corrections amid cooling sentiments, especially when traders started to be cautious about building up stocks. It is thought 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 3,670-3,740/mt ($519-529/mt) ex-warehouse on October 15, with the average price level RMB 153/mt ($21.6/mt) lower compared to that recorded on October 8, according to SteelOrbis’ data.

As of October 15, HRC futures at Shanghai Futures Exchange are standing at RMB 3,603/mt ($510/mt), increasing by RMB 2/mt ($0.3/mt) since October 8, while down 0.72 percent compared to the previous trading day, October 14.

$1 = RMB 7.0731