Ex-China HRC offer prices have moved down this week following the sharp declines seen in the local market caused by weaker future prices and reduced demand.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $810-840/mt FOB for June shipment, with a midpoint at $825/mt FOB, with the average price $55/mt lower compared to last week. Besides, the lowest offer prices of ex-China HRC came from Hebei Province-based Chinese steelmaker Anfeng Iron and Steel, which have been heard at $790/mt FOB. “The rapid spread of the Covid-19 pandemic resulted in lockdowns in Shanghai and other cities in China, and strict control measures being implemented in many other regions of China, which exerted a negative impact on demand for HRC,” an international trader told SteelOrbis.
Bearish sentiments have prevailed among market players as China has been struggling in the fight against the rapid spread of the Omicron variant, and so the lockdown in Shanghai has continued, negatively affecting the whole country, with more high-speed roads being shut down, resulting in difficulties in circulation of goods.
At the same time, the tradable price level for ex-China SS400 HRC has been heard at $790-830/mt FOB, depending on the destination, down by $35-50/mt over the past week. In particular, this week, ex-China SS400 HRC offers to Vietnam have fallen to 820/mt CFR, compared to $855-860/mt CFR last week, while offers to Pakistan dropped to $840-850/mt CFR, versus $875-885/mt last week.
Meanwhile, demand in higher-priced destinations has continued to slow down, and so Chinese HRC suppliers kept decreasing their prices to attract buyers. Ex-China offers for SAE1006 HRC have dropped to $940-950/mt CFR UAE, compared to $960-980/mt in the beginning of last week. Besides, Chinese SS400 HRC offers for Turkish buyers have been heard at around $930/mt CFR, down $15/mt week on week, while offers for SAE1006 coils have been reported at $970/mt CFR and below, compared to $1,020/mt CFR last week. Ex-China SAE1006 HRC has also been offered to Southern Europe at $1,250/mt CFR duty paid this week, though most European customers believe that this level is not workable anymore. Furthermore, the latest offers to South America have been voiced at around $985-1,000/mt CFR, down by $25-30/mt over the past week.
During the given week, the continuous Covid-19 pandemic negatively affected production, trading of and demand for HRC. As the Labor Day holiday is approaching, the demand for HRC will unlikely see a significant improvement. At the same time, the lockdown in Shanghai is unlikely to be lifted ahead of the holiday. It is thought that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.
Domestic HRC prices in China are at RMB 4,970-5,070/mt ($758-773/mt) ex-warehouse on April 26, with the average price level RMB 190/mt ($29/mt) lower as compared to April 19, according to SteelOrbis’ data.
As of April 26, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,907/mt ($748/mt), decreasing by RMB 257/mt ($39.2/mt) or 5.0 percent since April 19.
$1 = RMB 6.559
