Chinese mills' HRC export prices down $20/mt, traders cut prices by over $30/mt as mood worsens

Ex-China HRC offer prices have edged down following the declines seen in the local spot market and given the decreases in futures prices. In addition, market insiders are expecting the trend to continue for the next rounds of sales as, while Chinese traders have been offering and selling HRC position cargoes at lower prices, more and more bids have been heard at lower levels globally.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $600-630/mt FOB for June shipment, with a midpoint at $615/mt FOB, down by $20/mt week on week. According to market insiders, Shandong Province-based Chinese steelmaker Rizhao Iron and Steel has dropped its offers by $20/mt week on week to $610/mt FOB, while Jiangsu-based Province steelmaker Shagang Steel Group has offered SS400 HRC at $615/mt FOB. However, offers from smaller mills, such as Anfeng Steel, have been voiced at around $555-560/mt FOB.

At the same time, the tradable price level for SS400 HRC coils has been heard at $545-570/mt FOB, versus $580-610/mt FOB last week, with the lower end of the range corresponding to offers in Vietnam at $555-565/mt CFR, down by $15-25/mt over the past week. However, according to sources, Vietnamese customers’ bids have already been heard at $540-550/mt CFR. Meanwhile, ex-China offers for SAE1006 HRC have been extremely rare in Vietnam this week so far, with the indicative offers standing at around $610/mt CFR, compared to $640-650/mt CFR last week. Furthermore, offers for ex-China SS400 HRC in Pakistan have been reported at $565/mt CFR, down by more than $35/mt week on week.

Meanwhile, Chinese suppliers have continued to focus on expansion of sales to higher-priced destinations, like Turkey where, after selling at least 30,000 mt at $647 CFR at the beginning of last week, material changed hands at $635 CFR for another 30,000 mt at the end of last week, while new ex-China offers for Q195 HRC have dropped to $610-620/mt CFR this week. In the Middle East, business activity has been slow this week due to the Eid holiday. However, though no new firm offers for ex-China HRC have been reported so far, “last week’s offers at $640/mt CFR are not workable anymore,” a source said.  

Furthermore, several deals for ex-China HRC are reported to have been done in South America at $670-680/mt CFR Pacific Coast at the end of last week, while this week customers’ bids have fallen to $655/mt CFR and below.  

In the meantime, HRC prices in the Chinese domestic market have seen a declining trend amid the big declines in HRC futures prices and slack demand from downstream users. 

In particular, domestic HRC prices in China have settled at RMB 3,980-4,200/mt ($578.5-610.5/mt) ex-warehouse on April 25, with the average price level RMB 160/mt ($23.3/mt) lower compared to April 18, according to SteelOrbis’ data.  

It is notable that HRC futures prices have moved down sharply amid the prevailing bearish sentiments among market players. In addition, inventory of HRC has increased, exerting a negative impact on prices, while most sources believe that, since the Labor Day holiday (April 29-May 3) is approaching, demand may remain slack, which will weaken the support for HRC prices. At the same time, iron ore prices have edged down further, negatively affecting HRC prices from the cost side. Steelmakers’ profit margins are razor-thin, resulting in their plans to reduce production. As a result, HRC prices in the Chinese domestic market may gain support and indicate a rebounding trend in May, though they will likely edge down in the coming week.  

As of April 25, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,752/mt ($545/mt), decreasing by RMB 285/mt ($1.2/mt) or 7.1 percent since April 18.  

  $1 = RMB 6.8847