Ex-China HRC offers show only mild upward bias despite rising local prices lifted by higher futures

Although average HRC prices in the Chinese domestic market have increased slightly compared to the previous week amid rising HRC futures prices, most offers from Chinese HRC exporters, both mills and traders, have remained relatively stable or have been showing only a slight upward bias.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $460-485/mt FOB, with a midpoint at $472.5/mt FOB, the same as last week. Meanwhile, offers from smaller mills have been voiced mainly at $455-460/mt CFR, up by $5/mt on the lower end of the range week on week.

At the same time, while offers from most Chinese traders have remained at $455-460/mt CFR, according to sources offers from non-VAT traders have remained at $445-450/mt FOB. “China’s market sentiment improved following news of supportive real estate policies. Steel inventories continue to decline, and demand has recently gained momentum, lifting domestic prices slightly despite limited speculative buying. However, the export market remains sluggish. Mills are attempting to raise their base prices by $3–5/mt, but low bid price levels leave few deals achievable,” a market source told SteelOrbis.

In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at $478-480/mt CFR, up by $3-5/mt week on week. Furthermore, most offers for ex-China Q235 HRC have settled at $472-475/mt CFR Pakistan, compared to $470-475/mt CFR last week, while offers for Q195 HRC have settled at $463/mt CFR.

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have been voiced at $480-495/mt CFR UAE from traders, mainly the same last week. According to sources, a deal price for ex-China SS400 HRC has been reported at $480/mt CFR UAE for a small batch. “Some customers still believe $475/mt CFR could be possible to achieve, though most agree prices are at $480/mt CFR and above” a market insider said.

Besides, Chinese Q195 HRC offers to Turkey have been estimated at $490/mt CFR from Chinese suppliers with VAT, up by $5/mt on the lower end of the range week on week, while offers from non-VAT Chinese sellers have been estimated at around $480/mt CFR, the same as last week.

In the meantime, HRC prices in the Chinese domestic market have indicated slight rises amid increasing HRC futures prices and production cuts of steel enterprises in eastern China due to the environmental protection measures amid heavy pollution weather alerts. Demand for HRC from home appliance manufacturers has been quite good at present, bolstering prices to a certain degree, though its sustainability is in question in the traditional offseason.

Domestic HRC prices in China have settled at RMB 3,360-3,440/mt ($473-485/mt) ex-warehouse on November 25, with the average price level RMB 13/mt ($1.8/mt) lower compared to that recorded on November 18, according to SteelOrbis’ data. 

As of November 25, HRC futures at Shanghai Futures Exchange are standing at RMB 3,309/mt ($466/mt), increasing by RMB 23/mt ($3.2/mt) or 0.7 percent since November 18, while rising by 0.64 percent compared to the previous trading day, November 24.

$1 = RMB 7.0826