Ex-China HRC price trend lacks clarity, though mood worsens locally

Following some recovery in HRC futures prices in China seen at the end of last week, this week the mood among market insiders has started to worsen once again, while the ex-China HRC price trend has been lacking clarity given that offers from big Chinese mills have declined slightly, while offers from Chinese traders have continued to fluctuate. At the same time, HRC prices in the Chinese domestic market had moved up compared to the previous week amid the increases in HRC futures prices, though they have started to decrease again since yesterday, March 17. 

Specifically, export offers for boron-added SS400 HRC by major Chinese mills have settled at $470-475/mt FOB, with a midpoint at $472.5/mt FOB, down by $5/mt over the past week. "The strong surge in domestic spot prices and in Shanghai steel futures prompted Chinese mills to further increase their offers on Friday. However, trading remained subdued as the sharp price hikes kept both traders and overseas buyers cautious and on the sidelines,” a market insider told SteelOrbis.

Meanwhile, the tradable prices for ex-China SS400/Q235 HRC have been estimated at $450-465/mt FOB, depending on the destination, against $455-460/mt FOB last week. Offers for ex-China Q235 HRC, 2,000 mm, in Vietnam have been voiced at $475-478/mt CFR, up by $2-5/mt week on week, but down by $3/mt since Friday, March 14. Besides, offers for ex-China SS400 HRC in the Middle East have been estimated at $495-505/mt CFR, up by $5/mt week on week, while offers in Turkey for Q195b HRC have been estimated at $490-495/mt CFR from traders, mainly the same as last week.

In the meantime, domestic HRC prices in China have settled at RMB 3,450-3,640/mt ($481-508/mt) ex-warehouse on March 18, with the average price level RMB 84/mt ($12/mt) higher compared to that recorded on March 11, but down by RMB 5/mt ($0.69/mt) since March 17, according to SteelOrbis’ data.

During the given week, both the supply and demand in the HRC market have increased, resulting in a rise in prices. However, demand has improved slowly this week. The demand release from downstream users is not as good as market players had expected, while declining HRC futures prices have also negatively affected market sentiments. At the same time, both coking coal and coke prices have decreased, weakening the support for HRC prices from the cost side. It is thought that HRC prices in the Chinese domestic market will continue to fluctuate within a limited range in the coming week.

As of March 18, HRC futures at Shanghai Futures Exchange are standing at RMB 3,370/mt ($470/mt), increasing by RMB 33/mt ($4.6/mt) or 1.0 percent since March 11, while down 0.88 percent compared to the previous trading day, March 17.       

$1 = RMB 7.1733