Ex-China HRC offers from mills slightly higher, but deal prices keep falling

Although this week some big Chinese mills have decided to go slightly higher, the tradable level has remained mainly unchanged or has even dropped in some contracts. At the same time, although domestic HRC prices have increased over the past week, market players are cautious towards the future prospects for the HRC market considering the still slack demand from downstream users amid the repeated outbreaks of the Covid-19 pandemic.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $590-600/mt FOB for October and November shipments, with a midpoint at $595/mt FOB, up by $2.5/mt week on week. Besides, offers from smaller mills have been reported at as low as $555/mt FOB, compared to $570/mt FOB last week. Meanwhile, according to market insiders, official offers from big mills and their deal prices differ a lot. “One of the biggest Chinese producers, which this week is officially offering HRC at $600/mt FOB, has sold its materials at $575/mt FOB to the Middle East,” an international trader told SteelOrbis.

Thus, the tradable level for ex-China SS400 HRC has settled at $552-575/mt FOB, down by $3-5/mt week on week, depending on the destination. In particular, Chinese traders have signed several deals with Vietnamese customers at $570/mt CFR, while most offers have been reported at $570-580/mt CFR, compared to $585/mt CFR at the beginning of last week. According to market insiders, the current freight from northern China to Ho Chi Minh is at $18-20/mt. At the same time, bids for ex-China SS400 HRC have settled at $565/mt CFR Vietnam.

In the SAE1006 HRC segment, the situation has started to change slightly this week, with more offers heard from China to different markets, such as the Middle East, Turkey and South America. In particular, HRC buyers in the UAE have reported ex-China offers at $630/mt CFR, in line with offers from India and Japan. Ex-China offers to Turkey have been heard at $650/mt CFR. Besides, offers to South America have been reported at $670-690/mt CFR, down by $10/mt week on week. However, almost no offers for ex-China SAE1006 HRC have been reported in Vietnam, with the indicative level standing at $600-610/mt CFR, down by $5-10/mt week on week.

During the given week, HRC prices in the Chinese domestic market have fluctuated within a limited range amid the repeated outbreaks of the Covid-19 pandemic in many regions of China, for instance in Chengdu and Shenzhen, which made market players cautious as regards the future prospects for the HRC market. Besides, experts are expecting that demand in the real estate industry will likely fall to its lowest level in the fourth quarter of the current year, which consequently will affect the demand for steel.

Domestic HRC prices in China are at RMB 3,890-4,060/mt ($568-587/mt) ex-warehouse on September 6, with the average price level the same as compared to August 30, but RMB 20/mt ($3/mt) higher compared to yesterday, according to SteelOrbis’ data.

As of September 6, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,769/mt ($546/mt), rising by RMB 37/mt ($5.4/mt) since August 30, and up RMB 69/mt ($10/mt) since Friday, September 2.

$1 = RMB 6.9096