Ex-China HRC prices drop sharply as mood worsens locally and futures prices fall

This week has started with a decrease in local HRC prices in China given the decline of HRC futures prices coupled with slowdown of stock built-up from downstream users for winter usage. Thus, this in its turn has weighted on HRC export quotations, with both big and smaller Chinese steel producers offering their materials at lower levels. At the same time, according to sources, offers from Chinese traders have been even more aggressive than those from mills, moving down by $22/mt since the last week of 2024, though trade activity has remained moderate on slow business activity revival after holidays.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $465-475/mt FOB, with a midpoint at $470/mt FOB, down by $12.5/mt since December 31. Meanwhile, smaller mills have been offering their HRC at around $445-460/mt FOB, versus $470-475/mt FOB last week.

In the meantime, the tradable price for ex/China SS400/Q235 HRC has been estimated at $445-455/mt FOB, down by $20-25/mt over the past week. Although the decline was anticipated given further drop in futures HRC offers and weakening of local prices in China on slow demand, most market insiders believe that “new offers are too aggressive even under the current market conditions.” Offers for ex-China Q235 HRC in Vietnam have settled at $460-465/mt CFR, against $480/mt CFR reported a few days ago. According to sources, several deals for around 20,000 mt of ex-China Q195 HRC were reportedly signed at $460/mt CFR level in the end of last week, though this week offers for ex-China Q195 HRC have dropped to $455/mt CFR.

Furthermore, offers for ex-China Q195 HRC from traders have been estimated at $480-490/mt CFR, down by at least $20/mt since last week, which translated to around $445-455/mt FOB. Besides, buyers from the Gulf region have reported new offers from Chinese traders at as low as $490/mt CFR, against $510/mt CFR last week, while offers from Chinese mills have been estimated at $500/mt CFR level. “Despite such sharp decline we have not heard any business done so far as market is slow on weak sentiments while buyers are expecting further correction of raw material and steel prices,” a market insider told SteelOrbis.

Meanwhile, domestic HRC prices in China have settled at RMB 3,420-3,520/mt ($476-490/mt) ex-warehouse on January 7, with the average price level RMB 70/mt ($9.7/mt) lower compared to that recorded on December 31, according to SteelOrbis’ data. 

During the given week, HRC prices in the Chinese domestic market have moved on a downtrend as it is approaching to the Chinese New Year holiday (January 28-February 4), which slackened the demand. Meanwhile, downstream users have slowed down their stock built-up for winter usage, exerting a negative impact on HRC prices. HRC producers implemented maintenances on their production lines, bolstering the prices to a certain degree. Moreover, Chinese major steelmaker Baosteel announced to keep its HRC prices stable for delivery in February, providing certain support to market sentiments. However, coke prices edged down by RMB 50-55/mt ($7-7.6/mt) on January 6, weakening the support to HRC prices from cost side. It is thought that HRC prices in the Chinese domestic market will edge down in the coming week.

As of January 7, HRC futures at Shanghai Futures Exchange are standing at RMB 3,343/mt ($465/mt), decreasing by RMB 75/mt ($10.4/mt) since December 31, while down 0.83 percent compared to the previous trading day, January 6.

$1 = RMB 7.1879