During the week ending August 22, export offer prices of hot rolled coil (HRC) from China have moved on a downtrend as suppliers have been trying to accelerate sales, following the aggressive policy of their Indian rivals and given the decline in raw material prices. Nevertheless, the Chinese mills have not been very successful in selling large volumes so far.
At present, export offers for boron-added SS400 hot rolled coil (HRC) given by Chinese mills are at $475-485/mt FOB, $10/mt below the last week’s level. “Shagang started to offer at $475/mt FOB from yesterday, August 21, so this indicates where the official market level is for Chinese mills,” an international trader told SteelOrbis. There has also been a lack of offers at $485/mt FOB with most steelmakers understanding that nobody will negotiate at this level.
Moreover, even lower prices for Chinese HRC exports have been heard from traders. The lowest level, which Vietnamese importers received, was $480/mt CFR, which corresponds to below $470/mt FOB. Though mills have not been ready to sell at this level, such low offers from traders signal that they expect the market will keep weakening and so they can start to test the market with lower prices right now. Demand for Chinese HRC has been low in Vietnam this week, as Vietnamese customers have preferred to buy from India at $472-477/mt CFR.
Although the price fluctuations in the local HRC market have not been so sharp over the week (average prices have lost just RMB 10/mt ($1.4/mt) since last Thursday), it is unlikely that Chinese suppliers will be able to avoid further price cuts in the export market in the near future. The iron ore price drop and the continued depreciation of the Chinese currency will facilitate a further decrease in ex-China HRC export prices.