Ex-China HRC offer prices have decreased this week amid the declines in HRC futures prices, impacted by continuing Covid-19 restriction measure.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $780-820/mt FOB for July shipment, with a midpoint at $800/mt FOB, with the average price $25/mt lower compared to last week, though offer prices of $740/mt FOB and even lower have even been heard from smaller mills and traders. “The lockdown in Shanghai has continued, while strict control measures have been seen in many other regions of China, which have negatively affected the demand for HRC,” an international trader told SteelOrbis.
At the same time, the tradable level for ex-China SS400 HRC has been heard at $730-780/mt FOB, down by $50-60/mt over the past two weeks, depending on the destination. In particular, this week ex-China SS400 HRC offers to Vietnam have fallen to $755-770/mt CFR, compared to $800-815/mt CFR two weeks ago. “Chinese suppliers attempted to increase their prices last week after the holidays amid some recovery in domestic prices, but local and futures prices have dropped again this week as we actually expected,” a market insider said. Ex-China SS400 HRC offers to Pakistan have decreased as well to $780-800/mt CFR, down by $30-50/mt over the past two weeks.
Meanwhile, demand in the higher-priced destinations has continued to slow down, and so Chinese HRC suppliers have decreased their prices to attract buyers. Ex-China offers for Q195 HRC have dropped to $880-900/mt CFR Turkey, compared to $930/mt CFR two weeks ago. Besides, ex-China SAE1006 HRC has also been offered to southern Europe at around $970/mt CFR excluding duty, though most European customers believe that this level is not workable anymore. Furthermore, the latest offers to South America have been voiced at $950-980/mt CFR, down by $20-35/mt over the past two weeks.
Following the long-standing lockdown in Shanghai, downstream industries have been negatively affected in the surrounding regions and spot HRC trading in Shanghai has yet to show signs of any significant improvement. Thus, during the given week, HRC prices in the Chinese domestic market have seen big declines. Currently, steelmakers are facing losses, while they have tried to reduce their purchase prices for coke, which may weaken the support for HRC prices.
Domestic HRC prices in China are at RMB 4,790-4,900/mt ($715-731/mt) ex-warehouse on May 10, with the average price level RMB 175/mt ($26/mt) lower as compared to April 26, according to SteelOrbis’ data.
As of May 10, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,698/mt ($701/mt), decreasing by RMB 209/mt ($39.2/mt) or 4.3 percent since April 26.
$1 = RMB 6.7134
