Ex-China HRC price trend lacks clarity as offers show different directions depending on supplier

Although as of Tuesday, November 19, the mood has changed slightly in the Chinese HRC market, with HRC futures prices showing some rebound, sentiments among Chinese HRC mills have not improved much, with most producers maintaining their offers at the same levels as last week, or even dropping their prices to attract buyers. However, offers from traders have been lacking a clear price direction since, while the tradable prices have remained stable or even declined slightly in the Middle East over the past week, offers for ex-China HRC in Asia have showed a slight rebound, though most buyers have been insisting on additional discounts.

More specifically, export offers for boron-added SS400 HRC from most large Chinese mills have settled at $490-505/mt FOB, with a midpoint at $497.5/mt FOB, down by $7.5/mt week on week, for December shipment mainly. Meanwhile, offers from smaller mills have been voiced at $480-485/mt FOB, versus $490-500/mt FOB last week.

At the same time, the tradable prices for SS400/Q235 HRC have been estimated at $480-490/mt FOB, down by $2/mt on the lower end of the range week on week. Offers for ex-China Q235 HRC in Vietnam have been estimated at $500-505/mt CFR, after several deals signed in recent days at $495-500/mt CFR for December shipment. Besides, offers in Pakistan for ex-China Q195 HRC have been voiced at $510-512/mt CFR, against deal prices at $505-510/mt CFR reported a few days ago.

Furthermore, while ex-China SS400 HRC offer prices have been estimated at $520-530/mt CFR UAE, against $530-535/mt CFR last week, market insiders have reported a few deals signed at $515/mt CFR UAE via non-VAT traders. Besides, according to sources, around 50,000 mt of ex-China materials are reported to have been booked by UAE-based pipe makers at $520-525/mt CFR levels.

In the meantime, average HRC prices in the Chinese domestic market have continued their downtrend amid declining HRC futures prices. Specifically, domestic HRC prices in China have settled at RMB 3,550-3,590/mt ($494-499/mt) ex-warehouse on November 19, with the average price level RMB 20/mt ($2.8/mt) lower compared to that recorded on November 12, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have edged down amid the weakness in both supply and demand. However, iron ore prices have edged up, providing some support for HRC prices from the cost side. At the same time, Li Chao, deputy director of the political research office of China’s National Development and Reform Commission (NDRC), stated on November 19 that China’s economic development will continue its upward trend seen since October as additional stimuli will be implemented effectively. The news that the central government of China will firmly promote economic development has bolstered market sentiments.

As of November 19, HRC futures at Shanghai Futures Exchange are standing at RMB 3,495/mt ($486/mt), decreasing by RMB 20/mt ($2.8/mt) since November 12, while up 1.19 percent compared to the previous trading day, November 18.

$1 = RMB 7.1911