Ex-China HRC offer prices have continued to tumble this week affected by the slack demand and sharp drop in ferrous and HRC futures prices. Besides, the trend has every chance of continuing further considering new offers from Chinese traders for HRC position cargoes at much lower prices.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $680-700/mt FOB for August shipment, with a midpoint at $690/mt FOB, which has decreased by $50/mt compared to June 14. Meanwhile, offers from smaller mills have been voiced at $650-660/mt FOB. “Ex-China HRC offers have started to drop on Friday, when several mills decreased their prices to $700-730/mt FOB, but this week has brought another fall, as we all expected,” a market insider stated.
“The big decreases in iron ore prices have weakened the support for the HRC market, while demand is not as good as market players had expected, and the downtrend in ferrous metal futures prices has also negatively affected the HRC market,” an international trader told SteelOrbis.
At the same time, the tradable level for ex-China SS400 has been heard at $630-670/mt FOB, from $700-740/mt FOB at the beginning of last week. In particular, offers for SS400 HRC from some Chinese mills in Vietnam have dropped to $695-700/mt CFR, compared to $730-740/mt CFR at the beginning of last week, while offers from Chinese traders have tumbled to $660-670/mt CFR, down by $25-45/mt since Friday, June 17. Meanwhile, some Vietnamese customers have already voiced their bids for ex-China SS400 at $650/mt CFR and below. Meanwhile, indicative offers for ex-China SAE1006 HRC have settled at around $705-715/mt CFR Vietnam, down by $10-15/mt CFR over the weekend. Furthermore, ex-China SS400 HRC offers to Pakistan have been heard at $725-735/mt CFR, down by $40-45/mt over the past week.
During the given week, HRC prices in the Chinese domestic market have moved down sharply amid the prevailing bearish sentiments among market players. The demand for HRC did not improve as quickly as market participants expected, exerting a negative impact on the market. Moreover, heavy rainfall has hit several provinces in eastern and southern China, also negatively affecting HRC prices. It is thought that HRC prices in the Chinese domestic market may edge down in the coming week.
Domestic HRC prices in China are at RMB 4,300-4,400/mt ($643-658/mt) ex-warehouse on June 21, with the average price level RMB 440/mt ($66/mt) lower as compared to June 14, according to SteelOrbis’ data.
As of June 21, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,291/mt ($641.4/mt), decreasing by RMB 406/mt ($60.7/mt) or 8.64 percent since June 14.
$1 = RMB 6.6851