Ex-China HRC prices drop further despite some local rebound early this week

Ex-China HRC prices have indicated another decrease over the past week as suppliers have been facing limited demand. Last week, the local market in China posted a fall, but early this week higher futures prices have provided some support for local HRC prices, which, however, has not affected sentiment of Chinese mills but, therefore, has slightly changed sentiment of traders.

At present, export offers for boron-added SS400 HRC given by major Chinese mills have come down to $600-610/mt FOB, with a midpoint at $605/mt FOB, down by $10/mt week on week. “Big Chinese mills like Shagang, Bengang, Benxi and others dropped their offers by around $5-10/mt to $605-610/mt FOB, while smaller mills like Anfeng are offering at around $595/mt FOB, down by $10/mt week on week,” a market insider said.

The tradable level for ex-China SS400 HRC has also declined over the past week to $570-605/mt FOB, depending on destination, versus $580-610/mt FOB a week ago. According to market insiders, several deals for ex-China SS400 coils have been signed at $585-595/mt CFR Vietnam, down by $15/mt compared to offers at the beginning of last week. However, the rebounding trend of HRC futures has bolstered HRC export prices to some extent, and a few traders have reportedly increased their offers for Vietnamese customers to $600/mt CFR, as SteelOrbis learned from the market on August 23. At the same time, several deals for ex-China SS400 HRC through traders have also been reported in Pakistan at $620-625/mt CFR, down by $5-10/mt week on week.

In the SAE1006 HRC segment, demand has been still weak for Chinese exports, while the competition has remained tough. In particular, the indicative level for ex-China SAE1006 HRC has been reported at around $620/mt CFR, compared to $630/mt CFR at the beginning of last week, but up $10-15/mt since Friday, August 19. Meanwhile, ex-China HRC offers to the Middle East have been reported at around $670/mt CFR, which has attracted zero interest due to tough competition with other foreign exporters like India and Japan, whose offers have been heard $30/mt lower compared to those from China.

At the same time, although HRC prices in the Chinese domestic market edged down over the past week, this week has started with more positive sentiment. In particular, on August 22, China’s over-five-year loan prime rate (LPR) decreased to 4.3 percent from 4.45 percent a month earlier, which marked the lowest level since the rate debuted in August 2019, according to the National Interbank Funding Center. This news boosted market players’ sentiments to some extent. Besides, according to the market insiders, the anticipated end of the extremely hot weather in China may provide the additional support to the HRC demand. Thus, it is thought that HRC prices in the Chinese domestic market will edge up slightly in the coming week.

Domestic HRC prices in China are at RMB 3,930-4,080/mt ($574-596/mt) ex-warehouse on August 23, with the average price level RMB 44/mt ($6.4/mt) lower as compared to August 16, but up by RMB 45/mt ($6.5/mt) day on day, according to SteelOrbis’ data.

As of August 23, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,951/mt ($577/mt), decreasing by RMB 99/mt ($14.5/mt) since August 16, but up RMB 124/mt ($18.1/mt) since Friday, August 19.

$1 = RMB 6.8523