Ex-China HRC prices fall again on lack of local market support, more declines expected

Following a drop in ex-China HRC quotations last week, this week has brought another fall in offers following the decrease in futures prices and local HRC prices in China. In addition, market insiders have fears that the trend will continue for a good while as Chinese traders have continued to offer and sell HRC position cargoes in the export market at much lower prices. 

At present, export offers for boron-added SS400 HRC given by major Chinese mills have come down to $660-680/mt FOB, with a midpoint at $670/mt FOB, down by $10/mt over the past week. “Most mills refuse to go lower than $660/mt FOB, but Anfeng Steel is officially offering at $630/mt FOB,” a market insider said. According to market insiders, considering that the demand is unlikely to rebound significantly in the short run in China, Chinese HRC prices may continue to fluctuate in April, though only the cost side can keep offering support.  

At the same time, the tradable level for ex-China SS400 HRC has been heard at around $615-640/mt FOB, versus $625-640/mt FOB last week, with the lower end of the range corresponding to offers in Vietnam at $625-635/mt CFR, down by $5-10/mt week on week. Besides, according to sources, Vietnamese customers are reported to have bought several small batches of ex-China materials at $625-630/mt CFR. Meanwhile, more deals for ex-China SS400 HRC have been reported in Pakistan as well. Thus, following a deal for around 3,500 mt of ex-China HRC at $660/mt CFR, the material has changed hands at $650/mt CFR. This means the deal prices are mainly the same as at the end of last week. Furthermore, ex-China Q195 and SS400 coils have been offered in the Middle East and Turkey at around $680-700/mt CFR, being the most competitive among other suppliers in the markets. Moreover, according to Chinese traders, Chinese mill Anfeng Steel has been offering its HRC Q235B, 2 mm and above, at $665-670/mt CFR UAE. At the same time, as SteelOrbis reported earlier, at the end of last week, cheaper offers for ex-China materials with non-controlled silicon content have been heard in the UAE market as well. In particular, Chinese traders have been offering Q235B HRC, 2.75 mm and above, with non-controlled silicon content, at $645/mt CFR and silicon with a maximum of 0.03 percent at $675/mt CFR, while a deal for around 5,000 mt was signed at around $655/mt CFR for May shipment.  

Meanwhile, lower offers have also been reported in the SAE1006 HRC segment. Thus, offers for ex-China SAE1006 HRC in Vietnam have been voiced at $675-695/mt CFR, down by $10/mt week on week. Besides, offers in Pakistan have settled at around $670/mt CFR, down by $10/mt over the past week. Furthermore, ex-China HRC offers in South America have been reported at $695-710/mt CFR, compared to deal prices at $700-720/mt CFR Pacific Coast last week.  

In the meantime, during the given week, average HRC prices in the Chinese domestic market have seen a decreasing trend amid the prevailing cautious sentiments among market players. In particular, HRC futures prices at Shanghai Futures Exchange (SHFE) saw a downtrend first while edging up later, signaling improved sentiments among market players. Besides, among positive factors has been the fact that inventory levels of HRC have seen a decreasing trend, while transaction activities in the HRC market have been at quite decent levels, though production output is expected to remain at relatively high levels, affecting HRC prices.  

Domestic HRC prices in China are at RMB 4,350-4,390/mt ($633-639/mt) ex-warehouse on March 28, with the average price level RMB 57/mt ($8.3/mt) lower compared to that recorded on March 21, according to SteelOrbis’ data.  

As of March 28, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,255/mt ($619/mt), decreasing by RMB 18/mt ($2.6/mt) or 0.42 percent since March 21.

$1 = RMB 6.8749