Chinese HRC mills keep export offers stable, but smaller mills and traders still push volumes at discounts

Ex-China HRC prices from mills have remained mainly stable compared to the previous week. However, following numerous deals reported at around $540-550/mt FOB last week, the tradable level for SS400 HRC has lost at least $10/mt week on week in new offers and deals globally. Meanwhile, HRC prices in the Chinese domestic market have indicated further declines amid falling HRC futures prices as no visible demand recovery has been seen over the past week.

At present, export offer for boron-added SS400 HRC from large Chinese mills have settled at $560-580/mt FOB, the same as last week. “Mills’ official levels have continued to be unworkable as more attractive prices have been coming from smaller Chinese mills and traders, especially non-VAT traders,” a market insider told SteeOrbis.

Thus, the tradable level for ex-China SS400 HRC has dropped by around $10/mt over the past week to $530-540/mt FOB. According to sources, although offers for ex-China SS400 HRC in Vietnam have been still heard at around $550/mt CFR, several new deals have been confirmed at $540-543/mt CFR, down by $5-6/mt from the deal prices last week. Meanwhile, more deals have been reported in the Middle East, the UAE in particular, at $570/mt CFR, while most offers have been voiced at $575-580/mt CFR, down by $5/mt week on week. Furthermore, another deal, but for ex-China Q355 HRC has been reported in Turkey at around $585/mt CFR this week, according to sources, while the tradable level for Q195 HRC has been estimated by most buyers at $560-570/mt CFR levels.

In the SAE1006 HRC segment, deals have remained rare over the past weeks, with most offers heard at $575/mt CFR Vietnam, the same as at the end of last week. Furthermore, ex-China HRC offers in South America have been reported at around $600-610/mt CFR, down by $5/mt week on week.

During the given week, as the traditional peak season of September and October is approaching, most market players have been more optimistic as regards the future prospects for the local HRC lmarket. At the same time, HRC producers’ profitability has weakened, resulting in their unwillingness to produce, bolstering HRC prices from the supply side to a certain degree. However, the weather outlook has been less positive lately, for instance, three typhoons, Saola, Damrey and Haikui, will impact China, which will bring heavy rainfall to China and will exert a negative impact on the demand for HRC.

Domestic HRC prices in China are at RMB 3,990-4,000/mt ($555-557/mt) ex-warehouse on August 29, with the average price level RMB 17/mt ($2.4/mt) lower compared to August 22, and down by RMB 35/mt ($4.8/mt) since Friday, August 25, according to SteelOrbis’ data.

As of August 29, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,848/mt ($536/mt), decreasing by RMB 69/mt ($9.6/mt) or down by 1.8 percent since August 22.

$1 = RMB 7.1851