Ex-China HRC prices edge up amid stronger local and futures prices, but freight uncertainty curbs trading

Ex-China HRC prices have increased over the past week, supported by firmer sentiment in the domestic market and higher offers from major Chinese mills, though trading activity has remained limited in some destinations due to rising freight costs and geopolitical uncertainties. In particular, export prices have been pushed up amid improving domestic demand, stronger futures prices and price hikes announced by leading producers, while escalating tensions in the Middle East and the resulting surge in freight rates have added further pressure to export quotations and disrupted offer activity to certain regions.

More specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $480-490/mt FOB, with a midpoint at $485/mt FOB, up by $7.5/mt week on week and up by $5/mt since the end of last week. However, offers from smaller private mills have remained at around $475-480/mt CFR, compared to $470-475/mt FOB last week. “We heard offers from Anfeng at $474/mt FOB, while offers from mills like Yongfeng are at $486/mt FOB, though talk about even higher offers at $500/mt FOB from some mills like Yangang is already circulating in the market,” a Chinese trader told SteelOrbis.

At the same time, offers from Chinese traders have been voiced at $475-490/mt FOB, versus $465-470/mt FOB last week. Ex-China 2,000 mm Q235 HRC offers in Vietnam are still rare due to the absence of non-VAT offers, with indicative offers with VAT for April shipment voiced at $498-505/mt CFR, up by $10-13/mt week on week. Besides, offers for ex-China SAE1006 HRC for May shipment has been voiced at $510/mt CFR Vietnam, excluding AD duty.

Furthermore, Chinese Q195 HRC offers through traders to Turkey have been estimated at $530-545/mt CFR, versus $510/mt CFR for April shipment last week, which translates to around $480-490/mt FOB, given that the freight rates have increased significantly this week due to the surge in oil prices and the escalation of the war in the Middle East. In particular, freight for steel products in large lots of 50,000 mt from China to Turkey is estimated by different sources polled by SteelOrbis to be in a range from $50-55/mt to $60/mt, which is up from $40-45/mt seen last week and pre-war rates of $35-37/mt. 

Offers for ex-China SS400 HRC in Egypt have been voiced at $520-540/mt CFR, according to sources.

In the meantime, most Chinese mills are reported to have stopped issuing new export offers to Gulf buyers as freight conditions and insurance coverage for vessels transiting the Strait of Hormuz remain unclear. Market participants said freight rates for shipments to the region have already risen by around $10/mt, which means around $50-55/mt for large volume cargoes of HRC, while the lack of security guarantees has made both buyers and sellers reluctant to conclude new deals. “Chinese mills have stopped offering HRC to the region due to the current situation. There are no fresh offers, while the freight rate is expected to increase threefold from the old rate. There is no clear freight level yet," a trader in the UAE told SteelOrbis.

Meanwhile, average HRC prices in the Chinese domestic market have moved up compared to the previous week amid the improved demand and bullish sentiments among market players. Domestic HRC prices in China have settled at RMB 3,290-3,380/mt ($477-490/mt) ex-warehouse on March 10, with the average price level RMB 17/mt ($2.5/mt) higher compared to that recorded on March 3, according to SteelOrbis’ data.

During the given week, demand for HRC from downstream users has improved, positively affecting prices. HRC futures prices have moved up, bolstering market sentiments firmly. Major Chinese steelmaker Baosteel has hiked its local base prices by RMB 200/mt ($29/mt) for HRC for delivery in April, exerting a positive impact on the HRC market. It is thought that HRC prices in the Chinese domestic market will edge up further in the coming week.

As of March 10, HRC futures at Shanghai Futures Exchange are standing at RMB 3,256/mt ($472/mt), increasing by RMB 37/mt ($5.4/mt) or 1.15 percent since March 3, while decreasing by 0.18 percent compared to the previous trading day, March 9.

$1 = RMB 6.8982