Ex-China HRC offers still rising gradually amid higher local and futures prices

This week, Chinese HRC exporters have continued to be more aggressive in increasing their offers given the rising trend of HRC futures prices in China together with the stronger local market. In terms of demand, most Asian-based customers have been rather cautious, refraining from purchases, though more trade activity has been seen in higher-priced destinations, such as Turkey.

At present, export offers for boron-added SS400 HRC from the large Chinese mills are at $665-685/mt FOB, for April and May shipments, with a midpoint at $675/mt FOB, up by $5/mt week on week. “Some mills have still been offering at $665-670/mt FOB. However, offers from big mills such as Angang, Yangang and Anshan have been voiced at $685/mt FOB. Shagang is offering at 675/mt FOB, while offers from Benxi are at $675/mt FOB,” a market insider told SteelOrbis.

Meanwhile, the tradable level for ex-China SS400 HRC has also risen, by $10/mt over the past week to $640-660/mt FOB, depending on the destination. “There has been talk that some Chinese traders are still offering SS400 HRC at $638/mt CFR Vietnam, but these offers are questionable given the strong uptrend, while official offers from Chinese suppliers have been voiced at $650/mt CFR and above in Vietnam,” an international trader said. Ex-China SS400 HRC in Pakistan has been voiced at around $680/mt CFR, up by $10/mt week on week.

In the SAE1006 HRC segment, offers from Chinese suppliers have been heard at $690/mt CFR Vietnam and above, versus $680-690/mt CFR last week. Meanwhile, offers to Pakistan have been reported at $710-730/mt CFR, up by $10-30/mt week on week. However, while most Asian customers have been rather quiet in terms of purchases, several deals have been reported in Turkey at $710/mt CFR for April shipment. Besides, another deal for 30,000 mt of ex-China SAE1006 HRC for April-May shipments is reported to have been signed at $722/mt CFR at the end of last week. At the same time, new offers have been voiced at $730-735/mt CFR Turkey this week. Offers for ex-China SAE1006 HRC to the Middle East have been voiced at around $730/mt CFR, while offers for SS400 HRC have been heard at above $700/mt CFR, according to sources.

In the past week, domestic HRC prices in China increased first while indicating decreases later amid improving demand from downstream users and increasing production outputs. In particular, during the given week, China held the two sessions meetings in Beijing, during which policies were issued to bolster the real estate industry, exerting a positive impact on the steel market. At the same time, demand for HRC has improved amid the positive future prospects for the market. Moreover, HRC futures prices have edged up, though indicating decreases during the trading session. Inventory levels of HRC have declined, which will positively affect prices. China aims to cool down speculation in the iron ore market and this has dragged down ore prices, weakening the support for HRC prices to some extent. However, demand for steel is expected to improve further in the near future, which will positively affect iron ore prices. It is expected that HRC prices in the Chinese domestic market will likely continue their uptrend in the coming week.

Domestic HRC prices in China are at RMB 4,300-4,390/mt ($621-634/mt) ex-warehouse on March 7, with the average price level RMB 63/mt ($9.1/mt) higher compared to that recorded on February 28, according to SteelOrbis’ data.

As of March 7, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,343/mt ($628/mt), increasing by RMB 83/mt ($12/mt) or 1.95 percent since February 28.

$1 = RMB 6.9156