Chinese HRC suppliers close many deals at higher prices globally before holiday

Chinese HRC mills, who had mostly maintained their offers at unchanged levels last week, have this week decided to go higher amid improved sentiments in the futures and local HRC markets in China. The tradable level has been corrected up in numerous deals since the end of last week as most sellers have decided to secure more bookings at higher price levels before leaving the market for the holiday.

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $470-480/mt FOB, with a midpoint at $475/mt FOB, up by $7.5/mt week on week for February and March shipments. Besides, according to sources, a few big mills have been trying to go even higher offering at $490/mt FOB, though this level has been considered as “totally unrealistic” by most market insiders. Furthermore, offers from smaller Chinese mills have been voiced at around $465-470/mt FOB, versus $455-460/mt FOB at the beginning of last week.

At the same time, Chinese HRC suppliers have managed to sell sizable volumes globally, while the tradable prices have increased to $468-475/mt FOB, depending on the destination, up by $8-10/mt week on week. The lower end of the range corresponds to ex-China Q235/SS400 HRC offers to Vietnam at $479-482/mt CFR, versus $470-475/mt CFR at the end of last week.

However, while trade has remained relatively slow in Vietnam and in the Asian region in general, Chinese suppliers have managed to succeed in new sales to the Middle East and Turkey. In particular, at least 15,000 mt of ex-China coils have been sold in the UAE at $510/mt CFR. Besides, more deals for around 10,000 mt and 30,000 mt, respectively, have been reported in Oman and Saudi Arabia at $490/mt CFR and $515/mt CFR, according to sources.

Furthermore, ex- China Q195 HRC cargoes of around 45,000-50,000 mt are reported to have been sold in Turkey at $502/mt CFR, versus deal prices at $484/mt CFR at the end of last week. In addition, offers from Chinese second-tier mills have settled at $495/mt CFR.

Chinese HRC suppliers have also been offering their materials to Egypt at around $500/mt CFR, though this level has not been fixed in new deals so far amid competitive offers locally, according to sources.

In the meantime, average HRC prices in the Chinese domestic market have moved up compared to the previous week amid increasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,470-3,570/mt ($484-498/mt) ex-warehouse on January 21, with the average price level RMB 73/mt ($10.2/mt) higher compared to that recorded on January 14, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have moved up amid rising HRC futures prices and improved transaction activities. However, the improved demand from downstream users did not continue as the Chinese New Year holiday (January 28-February 4) is drawing closer and closer.

As of January 21, HRC futures at Shanghai Futures Exchange are standing at RMB 3,468/mt ($484/mt), increasing by RMB 59/mt ($8.3/mt) or 1.7 percent since January 14, while down 0.26 percent compared to the previous trading day, January 20.

$1 = RMB 7.1703