Ex-China HRC prices fall amid weak demand, lower futures and high inventories

Ex-China hot rolled coil (HRC) prices have edged lower this week, with both mills and traders cutting offers in an effort to stimulate buying interest. Some traders have been able to conclude limited sales, particularly to Asian destinations such as Vietnam, by offering discounted prices. The downward movement has been driven by weaker domestic HRC prices and further declines in futures, which lately hit a three-month low.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has remained stable at $470–485/mt FOB, with a midpoint at $477.5/mt FOB, mainly for November shipment, down by $2.5/mt week on week. Meanwhile, offers from smaller mills have been voiced mainly at $465-470/mt CFR, the same as last week.

At the same time, offers from most Chinese traders have been voiced at $460-470/mt FOB, down by $5/mt week on week, while, according to sources, offers from non-VAT traders have been voiced at as low as $455/mt FOB. In particular, ex-China 2,000 mm Q235/SS400 HRC offers in Vietnam have been voiced at $485-488/mt CFR, down by $4-5/mt week on week. At the same time, according to sources, several deals have been reported this week, for at least 5,000 mt of ex-China Q235 HRC signed yesterday at $486/mt CFR, while today another deal has been done at $483/mt CFR Vietnam. Besides, following a deal for 20,000 mt of Q195 HRC at $468/mt CFR, most bids have already settled at $455/mt CFR. Besides, according to sources, last week a deal for ex-China Q235 HRC in Pakistan was reportedly signed at $500/mt CFR.

Meanwhile, Chinese offers to other destinations like the Middle East have settled at $500-505/mt CFR UAE, the same as last week, while Chinese Q195 HRC offers to Turkey have been estimated at $500/mt CFR and lower, the same as last week.

“Despite stable overall market sentiment, China continues to grapple with sluggish demand, high inventories and elevated output levels following the October holiday. Local prices have been adjusted slightly by around RMB 10-20/mt as mills cautiously test the balance between the domestic and export markets, though the broader outlook remains weighed down by unfavourable global conditions,” a market insider told SteelOrbis.

At the same time, average HRC prices in the Chinese domestic market have moved down sharply compared to the previous week amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,340-3,450/mt ($470-486/mt) ex-warehouse on October 14, with the average price level RMB 63/mt ($8.9/mt) lower compared to October 10, according to SteelOrbis’ data. 

During the given week, HRC prices in the Chinese domestic market have moved down significantly as inventories have been at relatively high levels, while downstream users have been unwilling to build up stocks amid the prevailing cautious sentiments caused by US President Trump’s plans to impose 100 percent tariffs on exports of goods from China. Meanwhile, HRC producers have not reduced their production. Moreover, demand for HRC from downstream users has not been as good as expected, exerting a negative impact on prices.

As of October 14, HRC futures at Shanghai Futures Exchange are standing at RMB 3,241/mt ($456.5/mt), decreasing by RMB 44/mt ($6.2/mt) or 1.3 percent since October 10, while decreasing by 0.7 percent compared to the previous trading day, October 13. 

$1 = RMB 7.1021