Ex-China HRC market conditions uneven due to export licensing

This week has brought some turbulence to the ex-China hot rolled coil (HRC) market. While HRC futures prices have continued to fluctuate within a limited range, export prices from big Chinese mills have started to edge up slightly. At the same time, offers from most traders have remained relatively stable, but low-priced non-VAT offers from traders have disappeared from the market following the introduction of export licensing for certain steel products, including HRC. The market has been actively evaluating the impact of these new licenses: some HRC exporters have become more positive, though most fear that the new steel export licensing requirements, combined with existing concerns over steel demand, could weigh on domestic HRC prices, as previously cheap non-VAT export volumes could be redirected back into the domestic market.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $465-490/mt FOB, with a midpoint at $477.5/mt FOB, up by $5/mt week on week. Meanwhile, offers from smaller private mills have been voiced mainly at $460-470/mt FOB, mainly the same as last week.

At the same time, tradable prices for Chinese SS400 HRC have settled at $455-465/mt FOB, the same as last week. Besides, according to sources, offers from non-VAT traders which were voiced at $445-455/mt FOB last week have disappeared from the market due to the introduction of export licensing.

In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at around $475/mt CFR, for January shipment, compared to $470-472/mt CFR last week.

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have been estimated at $490-505/mt CFR UAE, versus $480-505/mt CFR UAE, depending on the supplier.

Besides, Chinese Q195 HRC offers to Turkey have been estimated at $492-500/mt CFR for late January-February shipment, from $471-485/mt CFR last week.

Notably, at the end of last week, the Chinese Ministry of Commerce (MOFCOM), in coordination with the General Administration of Customs of China, announced new export licensing requirements for a wide range of steel products. The measure was released on December 9 and is scheduled to take effect from January 1, 2026. Under this adjustment, export licenses will be required for steel products covered by around 300 customs codes, including raw materials, steel billets, HRC, CRC and coated steel, as well as certain sections, steel pipes and stainless steel products.

According to market insiders, as for the HRC market, in the near term many expect this to create more paperwork and delays, but not a sharp cut in export volumes. This likely means some exporters may temporarily stop offering prices, especially those who have been offering non-VAT materials, until the new process becomes clear. Also, some believe that, although export sentiments may improve, the domestic market could face added supply pressure from material previously allocated for non-VAT exports. “The policy is administrative rather than restrictive. This is not a move to curb exports, but rather to introduce a licensing process, and once the mechanism is better understood, the long-term impact should be minimal,” a market insider told SteelOrbis.

Meanwhile, domestic HRC prices in China have settled at RMB 3,300-3,370/mt ($467-477/mt) ex-warehouse on December 16, with the average price level RMB 33/mt ($4.7/mt) lower compared to that recorded on December 9, according to SteelOrbis’ data.  During the given week, cautious sentiments have prevailed among market players in the local HRC market in China, exerting a negative impact on prices. Though large-scale manufacturing enterprises have maintained steady purchasing activities, small-sized enterprises and traders have been unwilling to conclude purchases of HRC, negatively affecting prices. Moreover, coke prices have moved on a downtrend, weakening the support for HRC prices.

At the same time, on December 12, Liaoning Province-based Chinese steelmakers Anshan Iron and Steel, Benxi Iron and Steel (Bengang) and Ansteel Group Lingyuan Iron and Steel Co., Ltd. (Lingyuan Steel) decided to raise their local base prices by RMB 100/mt ($14/mt) for hot rolled coil (HRC) for delivery in January next year, which may bolster market sentiments in the future. It is thought that HRC prices in the Chinese domestic market may fluctuate within a limited range in the coming week.

As of December 16, HRC futures at Shanghai Futures Exchange are standing at RMB 3,246/mt ($459/mt), decreasing by RMB 6/mt ($0.85/mt) or 0.18 percent since December 9, while rising by 0.68 percent compared to the previous trading day, December 15.

$1 = RMB 7.0602