Ex-China HRC price rises ease amid competition, limited fluctuations locally

Prices for ex-China HRC have posted some increases over the past week, but the pace of the increase has been small, and the high offers voiced just late last week have already been withdrawn from the market. The limited demand in the global market as well as the lack of support from the local market, where prices have been fluctuating within a limited range, have prevented export offers from China from recording further significant hikes.

Export offers for boron-added SS400 HRC given by major Chinese mills have edged up to $535-545/mt FOB for January shipment, mainly with the midpoint at $540/mt FOB, up by $2.5/mt from a week ago. Some mills like Shagang and Yangang have rolled over their offers at $550/mt FOB, but this level has not been included in the general range this week since more offers from large mills have been heard at $540/mt FOB. At the same time, last Friday some large Chinese producers were voicing offers for SS400 HRC at $560/mt FOB, but this level has been not heard anymore as the market has been slow and the upward sentiment has also eased.  

At the same time, the tradable level for SS400 HRC has been heard at $525-530/mt FOB, with the midpoint up also by just $2.5/mt over the past week. There have been reports about a few small deals done for ex-China HRC to Vietnam at $540/mt CFR. Offers for the same grade HRC have been at $565/mt CFR Pakistan. Also, to the Middle East Chinese suppliers have been offering SS400 HRC at $575-585/mt CFR, stable or slightly up over the past week.  

In the SAE1006 HRC segment, China has been even less competitive than for SS400, as competition with Japan, South Korea and India has been tough, and this is unlikely to be resolved in the short term, especially taking into account the recent removal of the export duty in India. Ex-China SAE1006 HRC has been offered at $560-565/mt CFR Vietnam, versus $560/mt CFR heard late last week. But even small-volume orders are likely to be taken by local suppliers Hoa Phat ($540-545/mt CIF) or Formosa Ha Tinh ($550-555/mt CFR).  

During the given week, HRC prices in the Chinese domestic market have fluctuated within a limited range amid the prevailing cautious sentiments among market players. Meanwhile, steel mills are under increasing pressure from the approaching cold winter weather. However, raw material prices have provided support for HRC prices. It is expected that HRC prices in the Chinese domestic market will likely continue their fluctuating trend within a limited range in the coming week.   

Domestic HRC prices in China are at RMB 3,770-3,910/mt ($526.0-545.0/mt) ex-warehouse on November 22, with the average price level remaining stable as compared to November 15, according to SteelOrbis’ data.   

As of November 22, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,755/mt ($524/mt), decreasing by RMB 25/mt ($3.5/mt) or 0.67 percent since November 15.   

$1 = RMB 7.1667