Ex-China HRC fall dramatically, amid local market weakness

Following a drop in ex-China HRC quotations last week, this week has brought another fall in offers following the decrease in futures and local HRC prices in China. In addition, market insiders have fears that the trend will continue for a good while as Chinese traders have started to offer and sell HRC position cargoes in the export market at much lower prices.

At present, export offers for boron-added SS400 HRC given by major Chinese mills have come down to $550-565/mt FOB, with a midpoint at $557.5/mt FOB, down by $15/mt over the past week.

Meanwhile, the tradable level for ex-China SS400 HRC has shown an even more dramatic fall, dropping to $520-540/mt FOB from $550-560/mt FOB last week. According to market insiders, most ex-China SS400 HRC offers from traders have been heard in Vietnam at $540-545/mt CFR, down by $20-25/mt week on week, though several deals have already been heard at $535/mt CFR Vietnam. Besides, position offers for ex-China SAE1006 HRC have settled at $565-570/mt CFR Vietnam, down by $13-20/mt over the past week. “We are just hearing deals for SS400 HRC, and no deals for ex-China SAE1006 HRC, though we expect new deals for SAE1006 HRC to be signed at around $560/mt CFR and below,” a Vietnamese trader told SteelOrbis. At the same time, new deals for ex-China SS400 HRC have been reported in Pakistan at $563-565/mt CFR, down by $7-15/mt week on week, while most offers have been voiced at $565-570/mt CFR.

In the meantime, apart from traditional destinations, more offers for ex-China HRC have been heard in higher-priced destinations at lower levels as well. In particular, offers for ex-China q195 HRC have been voiced in Turkey at $590-600/mt CFR, down by $20-30/mt week on week. Besides, ex-China SAE1006 HRC have been reportedly offered to the Middle East at around $620/mt CFR, down by $5-10/mt over the past week, though Chinese prices seem high for customers in the Middle East given more attractive offers from Japan and South Korea at $590-600/mt CFR and further downtrend expectations. Furthermore, this week, market insiders have reported offers for ex-China SAE1006 in southern Europe at around €625/mt CFR. “Chinese offers are very rare in Europe due to the antidumping duty at 18-36 percent, plus CVD at 4.6-36 percent, depending on the supplier, so we don’t think it is possible for them [Chinese suppliers] to sell to Europe,” an Italian trader said.

During the given week, HRC prices in the Chinese domestic market have moved down amid the continuous decreases in HRC futures prices and the prevailing bearish sentiments among market players. The repeated outbreaks of Covid-19 pandemic following the long holiday have negatively affected the demand for HRC.

Domestic HRC prices in China are at RMB 3,830-3,880/mt ($539.0-546.5/mt) ex-warehouse on October 18, with the average price level RMB 124/mt ($17.5/mt) lower as compared to October 11, according to SteelOrbis’ data. 

As of October 18, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,690/mt ($520/mt), decreasing by RMB 92/mt ($13.0/mt) or 2.4 percent since October 11.

$1 = RMB 7.1086