Export offers for hot rolled coil (HRC) from China have begun to rise significantly, following a sharp rally in HRC futures and domestic prices amid growing expectations of steel production cuts.
As of July 21, ex-China HRC offers from traders have increased to $455-475/mt FOB, compared to $445-460/mt FOB last week. In particular, according to sources, ex-China Q195 HRC offers in Turkey have settled at $490-503/mt CFR, up by at least $15/mt week on week. However, large Chinese mills that were offering at $460–470/mt FOB have so far remained silent, with the market widely anticipating new official prices will be released tomorrow at higher levels.
The rise in futures prices has been driven by a combination of positive sentiment in the Chinese domestic market and speculation about more concrete production control measures. As of July 21, HRC futures at the Shanghai Futures Exchange were standing at RMB 3,394/mt ($475/mt), up RMB 118/mt ($16.5/mt) or 3.6 percent compared to July 14, and 2.2 percent higher than the previous trading session on July 18.
According to market sources, the optimism began building last Friday night and extended into the weekend, amid signs that the Chinese government may roll out a more detailed plan to enforce steel output cuts. The renewed push for industry discipline has sparked hopes of reducing oversupply and ending aggressive price competition among mills.
In the domestic market, ex-works HRC prices have already increased by RMB 130/mt ($18/mt) over the past week, to RMB 3,460-3,700/mt ($482-515/mt) ex-works. As a result, the export market has become increasingly volatile, with fresh bids yet to be confirmed and price gaps widening to $5–10/mt, as mills hesitate to commit to new offers while assessing the evolving local dynamics.
“Adding to the bullish sentiment is the firming cost base. Iron ore futures continue to trade above RMB 800/mt, while a recent coke industry conference emphasized production control and loss reduction - signalling further upward pressure on steelmaking costs,” a market insider told SteelOrbis.
Additionally, news of a major hydraulic infrastructure project in western China has fuelled expectations of stronger steel demand in the coming months. This, combined with tighter supply forecasts, is reinforcing the view that Chinese mills may begin shifting more volumes to the domestic market and adjust their export strategies accordingly.
As the market waits for large mills to announce their new export prices, traders and buyers remain cautious, navigating through the current price volatility and the uncertainty regarding supply.