Ex-China HRC offers keep falling despite recovery of local and futures prices

As the National Day holiday (October 1-7) is approaching, downstream users have been seeking to replenish stocks, bolstering local HRC prices. However, the depreciation of the domestic currency against the US dollar has put downward pressure on ex-China HRC export prices, which as a result has benefited trade to some destinations such as Vietnam. Other buyers, however, have instead been holding back from making purchases, anticipating a further price decrease.

At present, export offers for boron-added SS400 HRC given by major mills are at $570-590/mt FOB for November and December shipments, with a midpoint at $580/mt FOB, down by $15/mt week on week. “Big mills such as Rizhao and Shagang have decreased their offers to $575/mt FOB, while offers from Baotou have dropped to $570/mt FOB, though offers from Benxi have settled at around $580/mt FOB,” a market insider told SteelOrbis.

At the same time, the tradable level for ex-China SS400 HRC has settled at $555-570/mt FOB, the same as last week. According to market insiders, numerous deals for around 100,000 mt in total have been signed with Vietnamese buyers at $565-580/mt CFRR (around $550-565/mt FOB) over the past two weeks. This week, most ex-China SS400 HRC offers have been heard in Vietnam at $575/mt CFR, while ex-China SAE1006 HRC has been offered at $585-600/mt CFR, compared to $600-610/mt CFR last week. Furthermore, buyers in Pakistan have reported several deals signed with Chinese traders at $590/mt CFR.  

“The sentiment is obviously better in the domestic market but the continued depreciation of the yuan coupled with high supply could affect future export prices,” a market insider said.

Following the significant decrease in local and futures prices last week, during the given week HRC prices in the Chinese domestic market have moved on an uptrend amid improved demand from downstream users ahead of the long holiday. It is thought that HRC prices in the Chinese domestic market will likely edge up in the coming week as pre-holiday stockpiling demand is expected to keep end-user consumption high.

Domestic HRC prices in China are at RMB 3,930-4,020/mt ($556-569/mt) ex-warehouse on September 27, with the average price level RMB 27/mt ($5.8/mt) higher as compared to September 20, according to SteelOrbis’ data. 

As of September 27, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,884/mt ($549/mt), rising by RMB 180/mt ($25/mt) or 4.86 percent since September 20, and up RMB 65/mt ($9.2/mt) or 1.7 percent since Friday, September 23.

$1 = RMB 7.0722