Ex-China HRC prices corrected down after holiday amid lower futures, lack of global demand

Chinese HRC exporters have returned to the market after the long National Day holiday (October 1-7) mainly with the same prices, though some mills have even dropped their offers given the customers’ resistance to any price increases amid still slow demand in most main destinations. Meanwhile, demand for local HRC has improved slightly in China, with higher local prices seen on Monday, October 10. However, on October 11, prices have rolled back again given a drop in futures prices and the still pessimistic mood in terms of demand coupled with high inventories.

At present, export offers for boron-added SS400 HRC given by major mills are at $560-585/mt FOB for mainly December shipment, with a midpoint at $572.5/mt FOB, down by $7.5/mt over the past two weeks. “Most big mills have rolled over their export prices, but some mills have decided to go lower. For example, Benxi Steel has decreased its offer to $560/mt FOB, down by $20/mt,” a market insider told SteelOrbis.

At the same time, the tradable level for ex-China SS400 HRC has settled at $550-560/mt FOB, down by $5-10/mt over the past two weeks. According to market insiders, most ex-China SS400 HRC offers have been heard in Vietnam at $565/mt CFR, compared to $570-575/mt CFR two weeks ago, while ex-China SAE1006 HRC has been offered at $578-590/mt CFR Vietnam, down by $7-10/mt over the period under review.

Meanwhile, ex-China SS400 HRC offers to the Middle East and Turkey have been voiced at levels around $620/mt CFR and slightly above. Besides, offers for ex-China SAE1006 HRC have setted at around $650/mt CFR UAE, though no deals have been heard so far, as, according to customers in the Middle East, more attractive offers have been coming from South Korea.

During the given week, demand from downstream users in China has improved slightly following the long holiday. However, inventory of HRC has seen increases, which, according to market participants, may exert a negative impact on prices in the short run. Moreover, HRC futures prices moved down by 2.75 percent on October 11, signaling that the repeated outbreaks of the Covid-19 pandemic have negatively affected the market. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 3,930-4,000/mt ($552-563/mt) ex-warehouse on October 11, with the average price level RMB 20/mt ($2.8/mt) lower as compared to September 27, according to SteelOrbis’ data. 

As of October 11, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,782/mt ($532/mt), decreasing by RMB 102/mt ($14.4/mt) or 2.6 percent since September 27.

$1 = RMB 7.1075