Ex-China HRC prices decline further amid lower futures prices, falling bids

Chinese hot rolled coil (HRC) export prices have softened further this week mainly under pressure from low domestic and export demand, coupled with another decline in domestic HRC prices in China amid decreasing HRC futures prices.  At the same time, most buyers are cautious towards purchases during the winter holidays, with only some business reported to have been done with Asian customers and with additional discounts.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $475-485/mt FOB, with a midpoint at $480/mt FOB, for February shipment, down by $10/mt week on week. Meanwhile, smaller mills have been offering their coils at $470-475/mt FOB, compared to $475-485/mt FOB at the beginning of last week.

The tradable levels for ex-China SS400/Q235 HRC have been estimated at $470-480/mt FOB, down by $5/mt on the lower end of the range over the past week. In particular, while most offers for ex-China Q235 HRC have been voiced at $485/mt CFR, down by $5/mt week on week, at least 10,000 mt of ex-China Q235 HRC is reported to have been sold to Vietnam at $480/mt CFR for late January-early February shipment. Besides, another deal for around 7,000 mt of ex-China Q195 HRC has been signed at $475-476/mt CFR, while Q195 HRC has been voiced at $480/mt CFR. Furthermore, according to sources, a deal for 8,000-10,000 mt of ex-China Q195 HRC has been signed at $490/mt CFR Pakistan this week, while another deal for at least 15,000 mt of ex-China SAE1005 HRC has been reported at $505/mt CFR, down by $15/mt compared to offer prices last week.

Meanwhile, offers for ex-China SS400 HRC in the Middle East have been voiced at $480/mt FOB, down by $10/mt over the past week, which translates to around $515-520/mt CFR, though no fresh deals have been reported so far in the region.

In the meantime, during the given week, HRC prices in the Chinese domestic market have moved down amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,500-3,580/mt ($487-498/mt) ex-warehouse on December 24, with the average price level RMB 57/mt ($7.9/mt) lower compared to that recorded on December 17, according to SteelOrbis’ data.

As of December 20, domestic inventories of HRC rose by 1.2 percent compared to December 10 due to the slack demand from downstream users. HRC prices may gain support from the demand from the manufacturing industry and the export market.

As of December 24, HRC futures at Shanghai Futures Exchange are standing at RMB 3,431/mt ($477/mt), decreasing by RMB 62/mt ($8.6/mt) since December 17, while up 0.53 percent compared to the previous trading day, December 23.

$1 = RMB 7.1867