Ex-China HRC market moves up after holiday, mills and traders push prices higher

Although some Chinese suppliers have yet to return after the Labor Day holiday, those already back in the market have moved quickly to announce revised offers at higher levels. Prices have edged up by approximately $5-10/mt from big mills, while the increase from smaller mills and traders is estimated at above $15/mt, supported by firmer sentiments in both the domestic spot market and HRC futures prices, which have helped strengthen the overall market mood.

More specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $510-525/mt FOB, with a midpoint at $517.5/mt FOB, up by $7.5/mt week on week. Besides, offers from smaller private mills have been voiced at around $510/mt FOB and above, versus $490-495/mt FOB last week.

Meanwhile, offers from Chinese traders have been estimated at $505-510/mt FOB, up by $10-15/mt week on week. According to sources, this week, ex-China 2,000 mm Q235 HRC offers in Vietnam have remained extremely rare, with indicative offers with VAT for June-July shipments voiced at $525/mt CFR, up by $5/mt week on week, while indicative offers for SAE1006 HRC have been voiced at $615/mt CFR Vietnam.

Offers for ex-Chinese Q195 HRC through traders to Turkey have been voiced at $560/mt CFR and above, up by $10/mt week on week. Furthermore, although most Chinese mills are still not issuing new export offers to Gulf buyers as freight conditions and insurance coverage for vessels transiting the Strait of Hormuz remain unclear, offers from Chinese traders have appeared in the UAE market at around $580-590/mt CFR, with the freight rate estimated at around $70/mt. Besides, offers for ex-China 1.2 mm HRC in Saudi Arabia have been heard at $610-615/mt CFR, the same as last week.

“China’s local HRC market has reopened on a firm note, with speculative funds flowing into the futures market, driven by expectations of global inflation and tightening supply. The export market has also strengthened, with HRC base prices now exceeding $500/mt FOB, while demand for slab remains robust, supported by broad-based buying interest from global markets,” a market insider told SteelOrbis.

Meanwhile, average HRC prices in the Chinese domestic market have moved up further compared to the previous week amid increasing HRC futures prices. In particular, domestic HRC prices in China are at RMB 3,490-3,620/mt ($509-528/mt) ex-warehouse on May 6, with the average price level RMB 83/mt ($12/mt) higher compared to that recorded on April 28, according to SteelOrbis’ data.

During the given week, HRC futures prices have increased, exerting a positive impact on prices in the spot market. Following the Labor Day holiday (May 1-5), downstream users have been seeking to build up stocks, resulting in improved transaction activities. Commodity prices have moved up after the long holiday, also positively affecting market sentiments. Tight supply in the market has also bolstered HRC prices firmly. It is expected that HRC prices in the Chinese domestic market will edge up slightly in the coming week.

As of May 6, HRC futures at Shanghai Futures Exchange are standing at RMB 3,493/mt ($509/mt), increasing by RMB 115/mt ($17/mt) or 3.4 percent since April 28, while increasing by 2.34 percent compared to the previous trading day, April 30.

$1 = RMB 6.8562