Chinese hot rolled coil (HRC) export offers have edged down slightly, while some mills and traders have managed to sell volumes mainly to regular Asian customers, but only providing additional discounts. The overall outlook is bearish for the near future. At the same time, after active import bookings in China, negotiations with foreign sellers have continued.
Export prices weak
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $415-420/mt FOB for late June delivery, down by $2.5/mt on average versus $415-425/mt FOB late last week. At the same time, fresh deals have been heard at $395-405/mt FOB for not high volumes at the lower end of the range this week.
More active negotiations have been heard with customers in Pakistan at $410-415/mt CFR, while demand from South Korea has been low.
Nevertheless, the competition with other HRC exporters in Asia has remained tough and overall sales volumes of Chinese sellers have been limited recently.
Over the past two weeks, a number of HRC cargoes from India have been sold at $395-410/mt CFR Vietnam, while from Taiwan sales have been heard at $400-405/mt CFR Vietnam, with the latest transaction from Japan being concluded at $405/mt CFR Vietnam.
Import negotiations underway, price increase unlikely
While export trading remains weak, there have still been negotiations for imported material in China. “More HRC imports have been heard in China, while import prices from South Korea and India have been heard rising this week,” an international trader told SteelOrbis.
Sources have said that about three deals for medium volumes of 20,000-40,000 mt each have been signed at around $390/mt CFR China over the past one week and half. Moreover, two weeks ago ex-South Korea HRC was sold at $395-400/mt CFR. Compared to the previous booking of Korean coils, prices have increased by at least $10/mt.
After these contracts, suppliers have been trying to increase offers, but most market participants said that the gap between local and import prices has started to narrow and that transactions above $390/mt CFR “are not reasonable.”
Local HRC prices in China under pressure
During the given week, HRC prices in the Chinese domestic market have seen slight declines. The sufficient supply in the HRC market has negatively affected prices. Downstream users have mostly maintained a wait-and-see stance towards HRC purchases. Approaching the Labor Day holiday (May 1-5), market players are cautious.
HRC futures prices at Shanghai Futures Exchange (SHFE) have edged down in the given week, exerting a negative impact on the HRC market.
Domestic HRC prices in China are at RMB 3,280-3,320/mt ($464-470/mt) ex-warehouse on April 28, with the average price level RMB 10/mt ($1.4/mt) lower as compared to April 21, according to SteelOrbis’ data.
As of April 28, HRC futures at the Shanghai Future Exchange are standing at RMB 3,149/mt ($445.4/mt), decreasing by RMB 36/mt ($5.1/mt) or 1.1 percent since April 21.
$1 = RMB 7.071
