Ex-China HRC offers rise amid stronger local market, but buyers still rely on discounts

Chinese HRC exporters have increased their offers this week mainly amid the upward trend in the domestic HRC market supported by increasing HRC futures prices and the rising trend of raw material prices. However, several deals have still been heard from mills at last week’s levels as buyers keep pushing for discounts, while customers in Asia, Vietnam in particular, still rely on cheaper ex-China offers from traders who offer without VAT.

At present, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $565-585/mt FOB, with the midpoint at $575/mt FOB, up by $15/mt over the past week. However, according to sources, several deals for at least 10,000 mt have been sold by a few Chinese mills at $560/mt FOB, as of today, July 25, since, “although some buyers are ready to accept higher offers, most of them still rely on additional discounts”.

As a result, the tradable level for ex-China SS400 HRC has been estimated at $550-565/mt FOB, up by $10/mt over the past week. Offers in Vietnam have been heard at $565-570/mt CFR, versus $550-565/mt CFR last week, with several deals reported to have been sighed at $565/mt CFR this week. Meanwhile, ex-China SS400 HRC offers in Pakistan have been reported at $580/mt CFR for mid-September shipment, up by $15/mt week on week. Furthermore, customers in Turkey and the UAE have reported ex-China HRC offers at $600/mt CFR and above, versus $580-590/mt CFR last week. Meanwhile, ex-China HRC offers in Saudi Arabia have been reported at $625-630/mt CFR, following several purchases of around 15,000 mt in total at $585-595/mt CFR last week.

In the SAE1006 HRC segment, ex-China offers in Vietnam have increased to $585-590/mt CFR, versus deal prices at $565-575/mt CFR last week. However, according to sources, Vietnamese buyers have kept negotiating at $575/mt CFR.  At the same time, Chinese traders are reported to have sold around 40,000 mt in total at $610-615/mt CFR to India this week, according to sources.

During the given week, the contradiction between supply and demand has not been apparent, while replenishment by downstream users bolstered HRC prices to a certain degree. At the same time, raw materials, including iron ore and coke, have indicated rises, which exerted a positive impact on HRC prices. Moreover, the Chinese government is expected to issue more policies to boost economic development, especially the rehabilitation of villages in urban areas, which will stimulate the demand for steel accordingly. At the same time, bullish sentiments have prevailed among market players.

Domestic HRC prices in China are at RMB 3,940-4,140/mt ($552-580/mt) ex-warehouse on July 25, with the average price level RMB 117/mt ($16.4/mt) higher compared to July 18, according to SteelOrbis’ data.

As of July 25, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,017/mt ($563/mt), increasing by RMB 167/mt ($23.4/mt) or up by 4.3 percent since July 18.

$1 = RMB 7.1406