Chinese HRC mills mostly keep export offers stable, worse local mood starts to affect tradable prices

Ex-China HRC prices from big mills have remained mainly stable compared to the previous week. However, with worse sentiments appearing in the local and futures HRC markets, the tradable level for SS400 HRC has lost at least $5/mt week on week in new offers from Chinese traders globally. 

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $580-590/mt FOB, the same as last week. “Most big mills have kept their offers unchanged, but the market estimates their firm order levels at around $575-580/mt FOB,” a market insider told SteelOrbis. 

At the same time, although most traders have also been resisting any changes, some, however, have decided to make concessions, providing small discounts. Thus, the tradable prices for ex-China SS400 HRC have been estimated at $560-570/mt FOB, down by $5/mt FOB over the past week. According to sources, offers for ex-China SS400 HRC have been estimated at $570-575/mt CFR Vietnam, down $5/mt week on week, while several deals for Q195 HRC have been reported at $565/mt CFR, against $567-570/mt CFR last week. Several small deals for ex-China Q235 HRC in Vietnam have also been reported at $567/mt CFR, while offers have settled at $570/mt CFR, mainly the same as last week. 

Besides, most offers for ex-China SS400 HRC in the Middle East are still voiced at $600-620/mt CFR, depending on the supplier, but offers at $590/mt CFR have started to appear in the market this week, according to sources. Offers for ex-China Q195 HRC from traders in Turkey have been voiced at $595-610/mt CFR, against $605-610/mt CFR last week. 

Average HRC prices in the Chinese domestic market have seen declines, falling to RMB 4,050-4,250/mt ($570-599/mt) ex-warehouse on December 19, with the average price level RMB 63/mt ($8.9/mt) lower compared to that recorded on December 12, according to SteelOrbis’ data. Meanwhile, the general mood has been rather unclear since, while on the one hand major Chinese steelmaker Shougang Group announced higher HRC offers for delivery in January, on the other hand the cold weather and the recent earthquake which hit Gansu Province in China have negatively affected the market. 

In particular, during the given week major Chinese steelmaker Shougang Group announced a hike in its local base prices for HRC by RMB 200/mt ($28/mt) for delivery in January next year, exerting a positive impact on market sentiments. However, the widespread cold weather has weakened the support for HRC demand. Moreover, the 6.2 magnitude earthquake in Gansu has negatively affected transportation of and demand for HRC in northwestern China. At the same time, Jiangsu-based Shagang Group has announced a rise of RMB 50/mt ($7/mt) in its scrap purchase price on December 19, which will bolster steel prices from the cost side. It is thought that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week. 

As of December 19, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,030/mt ($568/mt), decreasing by RMB 125/mt ($17.6/mt) or down by 3.0 percent since December 12, though increasing by 0.32 percent compared to the previous trading day. 

$1 = RMB 7.0982