Chinese HRC exporters still bullish despite lack of customer support

Chinese HRC exporters have continued to go higher in their prices this week given the rising trends of futures and local HRC prices along with the strengthening of the Chinese yuan against the US dollar. However, the increase has not been supported by most buyers as there are still more attractive offers from other suppliers, from Asia in particular. Thus, the gap between buyers’ bids and Chinese sellers’ offers has continued to widen.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $560-580/mt FOB, mainly for February shipment, with the midpoint at $570/mt FOB, up by $20/mt week on week. “Such mills as Angang and Benxi are offering at $575/mt FOB, while offers from Shangang and Shagang have settled at $580/mt FOB. Several offers, however, are still heard at $555-560/mt FOB,” a market insider told SteelOrbis.

At the same time, the tradable level for ex-China SS400 HRC has increased as well, reaching $550-565/mt FOB, up by $5-15/mt week on week, depending on the destination. Offers for ex-China SS400 HRC to Vietnam have increased to $570-580/mt CFR, up by $25-30/mt week on week and compared to $555-565/mt CFR at the end of last week. However, according to market sources, most Vietnamese customers “are not willing to buy at higher than $560/mt CFR and are actually bidding at $550/mt CFR”. Besides, offers to Pakistan have settled at around $580/mt CFR, while customers from the Middle East have reported ex-China SS400 HRC offers at around $605/mt CFR, up by around $10-20/mt over the past week.

Meanwhile, in the SAE1006 segment, Chinese suppliers have increased their prices to Vietnamese buyers by around $20/mt to $590/mt CFR level, which is estimated as the highest among all other foreign suppliers. In particular, indicative offers from Japan, South Korea and Taiwan have been heard at around $570/mt CFR Vietnam. Meanwhile, a deal for 3,000/mt of ex-China SAE1006 HRC has been reported in Pakistan at $590/mt CFR this week. Furthermore, offers to Turkey have been reported at $620/mt CFR, versus $590-600/mt CFR last week.

During the given week, HRC prices in the Chinese domestic market have moved up amid the easing of Covid-19 restrictions in most regions of China. Meanwhile, the firm trend of raw material prices has bolstered the HRC market from the cost side. At the same time, market players mostly hold bullish attitudes towards the prospects for the future HRC market at present as they think government policies to boost the real estate market will likely positively affect HRC prices.

Domestic HRC prices in China are at RMB 3,920-4,040/mt ($562.4-579.6/mt) ex-warehouse on December 6, with the average price level RMB 70/mt ($10.0/mt) higher than that recorded on November 29, according to SteelOrbis’ data.

As of December 6, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,920/mt ($562.4/mt), increasing by RMB 40/mt ($5.7/mt) or 1.03 percent since November 29.

$1 = RMB 6.9746