Chinese HRC mills keep export prices stable at high levels, mood worsens locally amid futures fluctuations

This week has started with a decrease in local HRC prices in China given the fluctuations of HRC futures prices coupled with the increased inventory levels of coils in the domestic market. However, this in turn has not weighed much on HRC export quotations, with Chinese steel producers, especially the major ones, still offering at stably high levels, while some mills have announced even higher offers. At the same time, according to sources, offers from several Chinese traders, in short positions especially, have decreased by around $10/mt over the past week, though trade activity has remained moderate.

More specifically, export offers for boron-added SS400 HRC from most large Chinese mills have settled at $585-595/mt FOB for March shipment mainly, the same as at the end of last week. However, according to sources, several mills who were out of the market last week have come out with new offers at $600-605/mt FOB. Thus, the midpoint has moved to $595/mt FOB, up by $5/mt week on week. “While most mills didn’t change their offers as compared to last week, some like Rizhao are offering at $590/mt FOB, but higher offers have been heard from Benxi at $600/mt FOB and from Yanshan at $605/mt FOB,” a market insider told SteelOrbis.

Meanwhile, the tradable level for ex-China SS400 HRC has been estimated at $565-575/mt FOB, down by $5/mt on the higher end of the range over the past week. Buyers in Vietnam have reported ex-China SS400 HRC offers at $580/mt CFR, against $580-585/mt CFR last week, while offers for Q235B HRC have dropped by $10/mt week on week to $570/mt CFR. At the same time, most ex-China SS400 HRC in the Middle East has been estimated at $600-610/mt CFR, against $610/mt CFR last week, while some buyers still claim offers from Chinese first-tier mills are at $615-620/mt CFR, the same as last week.

In the SAE1006 segment, most offers have remained unchanged both in Asia and the Middle East region, with indicative prices for ex-China SAE1006 HRC in Vietnam at $600/mt CFR, while offers for UAE buyers have been voiced at around $630-640/mt CFR for March shipment.

In the meantime, average HRC prices in the Chinese domestic market have moved down slightly amid more fluctuations in HRC futures prices. Domestic HRC prices in China are at RMB 4,070-4,290/mt ($573-604/mt) ex-warehouse on January 9, with the average price level RMB 40/mt ($1.4/mt) lower compared to January 2, according to SteelOrbis’ data.

During the given week, demand for HRC in the Chinese domestic market has continued to be sluggish, resulting in certain pressures from oversupply, which has exerted a negative impact on prices. At the same time, raw material prices have indicated a downtrend, also weakening the support for HRC prices. Inventory levels of HRC have risen, and traders have chosen to sell at lower prices, aiming to bring in cash to ease financial tightness.

As of January 9, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,049/mt ($570/mt), decreasing by RMB 97/mt ($13.7/mt) or down by 2.3 percent since January 2, though remaining stable compared to the previous trading day (January 8).

$1 = RMB 7.101