Ex-China HRC offer prices rise, sentiment uncertain amid imbalance locally

This week, most Chinese HRC mills have been refraining from trading abroad, given the weak demand during the ongoing winter holidays in most regions, coupled with still unclear future trend. However, those who have been offering have decided to maintain HRC export offers at high levels, and some have even gone higher, despite price fluctuations in the local market.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $595-610/mt FOB for mainly February shipment, with a midpoint at $602.5/mt FOB, up by $7.5/mt week on week. “Offers from Shagang Steel are at $605/mt FOB, Rizhao Steel is at $595/mt FOB, some mills like Liuzhou Steel are even offering at $615/mt FOB, but most mills are keeping silent today, Tuesday, January 3,” a market insider said.

At the same time the tradable level for ex-China SS400 HRC has been assessed at $585-600/mt FOB, up by $10/mt over the past week. The lower end of the range corresponds to ex-China SS400 HRC offers to Vietnam at $595/mt CFR, though, according to market insiders, this price is “more an exception as only Angeng Steel has been offering at $595/mt CFR for end-of-February shipment, while offers from other suppliers have been voiced at $600-615/mt CFR Vietnam, compared to $585-600/mt CFR last week. At the same time, despite the increase, most bids from Vietnam have been voiced at $590/mt CFR, according to Vietnamese traders. Meanwhile, suppliers from the Middle East, the UAE in particular, have been reporting ex-China SS400 HRC offers at $630-640/mt CFR, the same as last week, though, according to Chinese traders, “deals can be concluded at $625/mt CFR.”

In the SAE1006 HRC segment, after at least 30,000 mt of ex-China materials were sold to Vietnam at $610/mt CFR last week, new offers have been voiced at not lower than $620/mt CFR. Besides, several deals for a total of around 35,000-40,000 mt of ex-China coils are reported to have been signed at $620-623/mt CFR Vietnam through traders this week, according to sources.

During the given week, HRC prices in the Chinese domestic market have fluctuated within a limited range amid the ups and downs in HRC futures prices. Thereby, market players hold a cautious attitude towards the prospects for the future HRC market. On the one hand, HRC prices may increase as inventory of HRC has declined, resulting in supply shortages, but, on the other hand, more construction activities have been suspended ahead of the Chinese New Year holiday, which has slackened the demand for HRC. “Given the ongoing spread of Covid-19 in China and poor orders received by manufacturers, migrant workers at some mills and construction sites have already started to return home for the Lunar New Year holiday, which is much earlier than usual,” a market insider told SteelOrbis.

At the same time, during the given week, Jiangsu Province-based Shagang Group, China’s largest private steelmaker, has raised its local offer prices for Q235 5.5 mm x 1,500 mm HRC by RMB 200/mt ($28/mt) to RMB 4,250/mt ($612/mt) ex-works, which positively affected market players’ sentiment.

In particular, domestic HRC prices in China are at RMB 4,020-4,120/mt ($578.4-592.8/mt) ex-warehouse on January 3, standing at the same level as on December 27, but with the average price level RMB 40/mt ($5.8/mt) lower than that recorded on December 30, according to SteelOrbis’ data.

As of January 3, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,099/mt ($590/mt), increasing by RMB 7/mt ($1.0/mt) or 0.17 percent since December 27.

$1 = RMB 6.9475