Ex-China HRC market posts mild rebound, no clear uptrend yet

Ex-China hot rolled coil (HRC) offers have edged up over the past week, reflecting a mild recovery rather than a clear upward trend. Mills have slightly increased their prices, while traders’ prices have remained mostly stable, with only a slight upward bias in several offers. The rebound has been supported by stronger domestic prices in China and firmer HRC futures prices, but buyers in key export markets continue to push for discounts.

 Specifically, export offers for boron-added SS400 HRC from large Chinese mills have moved to $480-490/mt FOB, with a midpoint at $485/mt FOB, up by $7.5/mt week on week, while offers from smaller mills have been voiced at around $475-485/mt FOB, up by $5/mt week on week.

Meanwhile, the tradable price for ex-China HRC from traders has settled at $475-478/mt FOB, depending on the destination, compared to $470-475/mt FOB last week. In particular, according to sources, following a deal for 20,000 mt of ex-China Q235 HRC 2,000 mm at $492/mt CFR last week, this week most bids have dropped to $490/mt CFR level, while offers have settled at $493-500/mt CFR, depending on the supplier, up by $4/mt on the higher end of the range since the end of last week.

Chinese offers to other destinations like those to the Middle East have settled at $510-515/mt CFR UAE, up by $10/mt on the lower end of the range over the past week, with a few deals reported to have been done at $510/mt CFR, according to sources. Besides, Chinese Q195 HRC offers to Turkey have settled at $515-520/mt CFR, up by $3/mt on the higher end of the range week on week.

In the meantime, average HRC prices in the Chinese domestic market have moved up compared to the previous week amid increasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,450-3,670/mt ($486-517/mt) ex-warehouse on September 9, with the average price level RMB 40/mt ($5.6/mt) higher compared to September 2, according to SteelOrbis’ data.

During the given week, the US issued its non-farm payrolls, fueling expectations of an interest rate cut by the US Federal Reserve, pushing up commodity prices and exerting a positive impact on HRC futures prices. The rising HRC futures prices have bolstered market sentiments. However, decreasing coke prices have weakened the support for HRC prices from the cost side. Currently, market players are observing the release of demand from downstream users during the traditional peak season, which will be the key factor affecting HRC prices.

As of September 9, HRC futures at Shanghai Futures Exchange are standing at RMB 3,349/mt ($472/mt), increasing by RMB 51/mt ($7.2/mt) or 1.5 percent since September 2, while increasing by 0.42 percent compared to the previous trading day, September 8.

 $1 = RMB 7.1008