Ex-China HRC prices fall again despite slight recovery in local and futures prices

Ex-China HRC offer prices have moved down further despite some rebounds seen in local and futures HRC prices. Meanwhile, considering Chinese suppliers’ readiness to provide significant discounts, trade activity has improved slightly not only in the traditional markets like Vietnam, but also in higher-priced destinations. 

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $620-650/mt FOB, mainly for June shipment, with a midpoint at $635/mt FOB, down by $10/mt week on week. “As we all expected, there is another fall this week, with offers from Rizhao Steel standing at $630/mt FOB, Benxi at $650/mt FOB, Baotou at $625/mt FOB and Anshan at $620/mt FOB. However, we feel that Chinese mills are unlikely to accept below $620/mt FOB in the next round if futures prices rebound further” a market insider said. 

At the same time, the tradable level for ex-China SS400 has been heard at $580-610/mt FOB, versus $585-620/mt FOB last week. The lower end of the range corresponds to Chinese traders’ offers in Vietnam, who are trying to sell short in Vietnam. In particular, most offers for ex-China SS400 HRC have been voiced at $590/mt CFR, versus $595-600/mt CFR at the beginning of last week, though some sources have been reporting lower offers at $580/mt CFR, while offers from Chinese second tier mills have been voiced at $610-620/mt CFR Vietnam. At the same time, according to sources, a deal for around 30,000-35,000 mt of ex-China SAE1006 HRC has been signed at $642/mt CFR this week, while most offers have been heard at the same level as last week, $645-650/mt CFR. Furthermore, ex-China SS400 HRC to Pakistan have been voiced at $620-625/mt CFR, down by $5/mt week on week. 

Meanwhile, Chinese suppliers have also continued to decrease their offers for higher-priced destinations, with several deals done at lower levels. In particular, following offers for Q195 HRC at around $655/mt CFR Turkey, market insiders have reported several deals for at least 30,000 mt of ex-China Q195 HRC signed at $647/mt CFR at the end of last week. “We will likely see more deals done in the short run as many traders are in the process of negotiations now,” a market insider told SteelOrbis. Besides, ex-China HRC offers have been reported in the Middle East at $640-650/mt CFR, down by $10-20/mt week on week, which is considered the most competitive level among all foreign suppliers. 

In the meantime, during the given week, HRC futures prices at Shanghai Futures Exchange (SHFE) have indicated a rebounding trend, exerting a positive impact on market players’ sentiments. At the same time, inventory levels of HRC have declined, bolstering prices in the spot market. According to sources, demand for HRC may move on a firm trend in the coming period, and this situation will last until May, which will provide some support for HRC prices. However, HRC producers’ capacity utilization rates will likely maintain their current levels, and so supply will be sufficient. However, uncertainty will come from the financial situation, for instance, whether special bonds can be injected into the market on time. 

Domestic HRC prices in China are at RMB 4,180-4,360/mt ($608-634/mt) ex-warehouse on April 18, with the average price level RMB 15/mt ($2.2/mt) higher compared to that recorded on April 11, according to SteelOrbis’ data. 

As of April 18, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,037/mt ($587/mt), increasing by RMB 8/mt ($1.2/mt) or 0.2 percent since April 11.   

$1 = RMB 6.8814