The Chinese hot rolled coil (HRC) market has resumed work after its long holiday which started on January 28. However, even though it is unusual for the start of a post-holiday period, HRC futures prices have already posted declines amid weak trading and expectations for any significant improvement only in March.
More specifically, several large Chinese HRC mills who returned to work have kept offers stable at around $470-480/mt FOB, with a midpoint at $475/mt FOB, the same as before the Chinese New Year holiday, two weeks ago, while most producers have not refreshed prices at all so far. “Most Chinese mills have not returned with new offers so far. Some expect new offers to be announced this week, while others expect the announcement next week,” a market insider told SteelOrbis, adding, “Nobody is optimistic given the declines in futures prices.”
Meanwhile, the tradable level for ex-China SS400/Q235 HRC has been relatively stable or showing a slight downward bias, standing at $463-475/mt CFR, down by $5/mt on the lower end of the range over the past two weeks. Specifically, ex-China Q235 HRC prices in Vietnam have been voiced at $475-480/mt CFR for March shipment, against $479-482/mt CFR before the holiday, though, according to sources, most bids have already been voiced at below $470/mt CFR.
Besides, most prices for ex-China Q195 HRC remained stable at around $510/mt CFR Turkey. However, most buyers’ sentiments have been negative in terms of future prices, expecting discounts in the new round of sales. Furthermore, no firm offers have been voiced for ex-China SS400 HRC in the Middle East, though the indicative prices have been assessed at $510-515/mt CFR, mainly the same as two weeks ago.
“China's stocks and currency have faced pressure as the markets reopened after the week-long break, encountering a fresh trade dispute with the United States. Meanwhile, the steel market typically requires about a month to meet spring demand, so a mild or positive outlook for steel prices in March seems reasonable as the worst season is nearing its end,” a market insider told SteelOrbis.
In the meantime, domestic HRC prices in China have settled at RMB 3,490-3,570/mt ($484-498/mt) ex-warehouse on February 5, with the average price level RMB 10/mt ($1.3/mt) higher compared to that recorded on January 22, according to SteelOrbis’ data.
As of February 5, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,416/mt ($481/mt), decreasing by RMB 34/mt ($4.7/mt) or 1.0 percent since January 22, while down 1.64 percent compared to the last trading day, January 27.
$1 = RMB 7.1693
