Ex-China HRC market tepid despite futures rebound

Despite a slight rebound in Chinese HRC futures prices, market sentiment has not significantly improved among Chinese exporters. Only some small mills and a few traders have raised their offers speculatively, partly on expectations of production cuts. In contrast, most major producers have kept their prices largely unchanged from last week. At the same time, while traders' offers - which had declined last week - have slightly recovered, overall business activity remains sluggish.

More specifically, export offers for boron-added SS400 HRC from most large Chinese mills stand at $460-475/mt FOB, the same as last week. “Most mills have been maintaining their prices stable, with only higher offers heard from a number of small mills and traders,” a market insider told SteelOrbis. Offers from smaller mills have been voiced at $452-460/mt FOB, up by $2-5/mt over the past week.

Meanwhile, tradable prices for ex-China SS400/Q235 HRC have settled at $453-460/mt FOB, up by $5/mt week on week. Offers for ex-China Q235 HRC 2,000 mm have been voiced at $470-472/mt CFR Vietnam, up by $2-4/mt week on week.

Besides, suppliers in the Middle East have reported most ex-China SS400 HRC offers at $490-495/mt CFR, against $490-500/mt CFR last week, though no deals have been heard so far, while a customer in the UAE said, “It is still possible to reach $480-485/mt CFR, or at least buyers expect this.” Furthermore, offers for ex-Turkey Q195 HRC have been estimated at $485-490/mt CFR, mainly the same as last week.

In the meantime, domestic HRC prices in China have settled at RMB 3,340-3,540/mt ($464-492/mt) ex-warehouse on April 29, with the average price level RMB 20/mt ($2.8/mt) lower compared to that recorded on April 22, according to SteelOrbis’ data. 

During the given week, supply of HRC has been at a relatively high level, exerting a negative impact on prices. At the same time, demand improvement is anticipated to be limited ahead of the Labor Day holiday (May 1-5), weakening the support for HRC prices to a certain degree. Cautious sentiments still prevail among market players as they do not think crude steel output reductions will be implemented strictly soon.

As SteelOrbis reported earlier this week, there was a rumor in the market that Chinese steelmakers with capacity exceeding 10 million mt would be required to cut crude steel output by 300,000 mt per month as of May 1 this year, while those steelmakers with capacity lower than 10 million mt would be required to reduce crude steel output by 100,000 mt per month, with the aim of reducing China’s crude steel output by 50 million mt for 2025. On April 28, when major Chinese steelmaker Baosteel’s deputy general manager Cai Yanbo was asked about the rumor, he said, “It is highly possible to implement a cut in crude steel output as has been mentioned in the government report.”

As of April 29, HRC futures at Shanghai Futures Exchange are standing at RMB 3,210/mt ($446/mt), increasing by RMB 39/mt ($5.4/mt) or 1.2 percent since April 22, while down 1.26 percent compared to the previous trading day, April 28.         

$1 = RMB 7.2029