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 in HRC futures prices. This in turn has weighed on HRC export quotations, with both big and smaller Chinese steel producers offering their materials at lower price levels. At the same time, according to sources, offers from Chinese traders have been even more aggressive than those from mills, moving down by $15/mt since the beginning of last week, though trade activity has remained moderate.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $450-465/mt FOB, with a midpoint at $457.5/mt FOB, down by $12.5/mt since May 27. Meanwhile, smaller mills have been offering their HRC at around $445-450/mt FOB, down by $5/mt week on week.

In the meantime, the tradable price for ex-China SS400/Q235 HRC has been estimated at $435-445/mt FOB, down by $15/mt over the past week. Although the decline was anticipated given the further drop in HRC futures prices and the weakening of local prices in China due to slow demand, most market insiders believe that the new offers are too aggressive even under the current market conditions. Offers for ex-China Q235 HRC in Vietnam have settled at around $450-455/mt CFR, against $465/mt CFR reported at the beginning of last week.

Furthermore, offers for ex-China Q195 HRC from traders in Turkey have been estimated at $470-475/mt CFR, down by at least $10/mt since last week, which translates to around $435-440/mt FOB. According to sources, a deal for around 45,000 mt of ex-China Q195 HRC is reported to have been signed at $470/mt CFR at the end of last week.

Besides, buyers from the Gulf region have reported new offers from Chinese traders at $475-480/mt CFR, against $480-485/mt CFR last week. According to sources, several deals for around 35,000 mt in total were signed at $477/mt CFR, for July shipment last week.

Meanwhile, domestic HRC prices in China have settled at RMB 3,210-3,450/mt ($446-479/mt) ex-warehouse on June 3, with the average price level RMB 53/mt ($7.4/mt) lower compared to May 27, according to SteelOrbis’ data.

During the given week, HRC futures prices have seen declines amid the Russian-Ukrainian conflict and disturbances in US tariff policies, negatively affecting the prices in the spot market. Meanwhile, demand from downstream users has not seen significant improvement, weakening the support for HRC prices. It is expected that HRC prices in the Chinese domestic market will edge down further in the coming week.

As of June 3, HRC futures at Shanghai Futures Exchange are standing at RMB 3,052/mt ($424/mt), decreasing by RMB 59/mt ($8.2/mt) or 1.9 percent since May 27, while down 1.04 percent compared to the previous trading day, May 30.

$1 = RMB 7.1869