Ex-China HRC down over the week, but some rebound in traders' prices today following futures

Although HRC futures prices in China are lower as compared to last week, today, Tuesday, October 24, some unexpected rebound has been reported, providing some hope for an improvement in Chinese HRC export prices. However, most Chinese HRC exporters, including both mills and traders, have remained rather pessimistic so far, decreasing their prices over the past week, while some big mills have decided to refrain from giving new offers, emphasizing that their order books are closed for December shipment.

Specifically, export offers for boron-added SS400 HRC from the major mills are estimated at $535-550/mt FOB, for December shipment, with a midpoint at $542.5/mt FOB, down by $12.5/mt since the beginning of last week, and rolling back to the price level two weeks ago. “Many mills are actually offering at $535-540/mt FOB, including Rizhao Steel at $535 FOB, while Benxi Steel has no new offers and no allocations for now,” a market insider told SteelOrbis.

Meanwhile, smaller Chinese mills have been offering SS400 HRC at around $525/mt FOB, and have remained more attractive for traders who are trying to fulfil their orders. However, offers from Anfeng Steel have been voiced at $510/mt FOB for Vietnam, which translates to around $520-523/mt CFR. Thus, the tradable levels for ex-China SS400 HRC have been estimated at $510-525/mt FOB, down by $5/mt on the lower end of the range since the end of last week and down by $10/mt on average over the past week. However, according to sources, deal prices for ex-China SS400 and Q195 HRC in Vietnam have settled at $520/mt CFR as of today, October 24, against $515/mt CFR yesterday. Furthermore, deals for ex-China materials have been reported in Pakistan at $527/mt CFR, while offers for SAE1006 HRC have been heard at $560/mt CFR.

Furthermore, after China sold around 10,000 mt of SAE1006 HRC at $573/mt CFR UAE, new offers have been estimated at relatively the same level in the UAE this week, while ex-China Q195 HRC offers in Turkey have been voiced at $550-555/mt CFR level, slightly down week on week.

At the same time, a deal for around 30,000 mt of ex-China SS400 HRC was closed in India at $582/mt CFR last week. However, according to sources, total volumes sold by Chinese suppliers at $582-585/mt CFR over the past two weeks have actually reached around 100,000 mt. “Tradable ex-China HRC prices are estimated at $575-580/mt CFR India this week, and they will gain approval given that offers from South Korea, Japan and Vietnam are at $610-615/mt CFR for higher grade HRC,” an Indian trader told SteelOrbis.

Meanwhile, during the given week, local demand for HRC has not seen a significant improvement, exerting a negative impact on prices, while cautious sentiments have prevailed among market players. Specifically, domestic HRC prices in China are at RMB 3,870-3,930/mt ($539-547/mt) ex-warehouse on October 24, with the average price level RMB 34/mt ($4.7/mt) lower compared to October 17, according to SteelOrbis’ data.

According to sources, most downstream users have been unwilling to build up stocks, weakening the support for the HRC market. However, iron ore futures prices have indicated a big rise of 3.78 percent on October 24, which may bolster HRC prices from the cost side.

As of October 24, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,754/mt ($523/mt), decreasing by RMB 12/mt ($1.7/mt) or down by 0.3 percent since October 17, but up by RMB48/mt ($6.5/mt) since yesterday.

$1 = RMB 7.1786