Chinese mills and traders have cut their HRC export offers mainly because of softening demand locally and the fading of the support that previously was coming from the raw material side, from coke and coking coal in particular.
The prices for boron-added SS400 HRC from large Chinese mills have been mainly heard at $510-515/mt FOB, down by $17.5/mt on average over the past week, with most market sources agreeing that last week’s offers were too optimistic and that, in reality, the market just postponed its inevitable decline.
At the same time, offers from smaller private mills and some traders (excluding non-VAT) are at $500-505/mt FOB, down by $5/mt on average since last week. Anfeng, which is usually taken as a benchmark in tradable HRC export prices, has offered at $500/mt FOB, versus $505/mt FOB last week. Non-VAT HRC offers are still rare, but market sources said that some $485-490/mt FOB offers could be found, which, however, “is too risky for major buyers”, a large trader said.
“Some adjustment happened on the big mills’ side and local sales are a little better… Coke [futures] fell dramatically due to the news of high-level policy on production control,” a Chinese trader said, adding that he expects generally weaker prices from China in June. Today, the Shaanxi Development and Reform Commission has ordered coal miners to ensure energy supply for summer, which will mean that most coal miners impacted by inspections and other challenges will have to show improvement in production, and this will influence not only thermal coal mines but also coking coal. As a result, the most-traded coking coal and coke futures at Shanghai Futures Exchange dropped by 6.01 percent and 3.03 percent, respectively.
In Vietnam, this week the ex-China 2,000 mm Q235 HRC indicative price level is at $515/mt CFR, down by $5/mt on average over the past week, but there are no new sales for Q195, which is not covered by AD duty and is more popular in Vietnam, after a previous deal at $506/mt CFR.
Offers for ex-Chinese Q195 HRC through traders to Turkey have been at $535-550/mt CFR, losing $5-15/mt over the past week. The lowest deal made by a Turkish re-roller was at slightly below $540/mt CFR, but the price level rather reflects non-VAT HRC pricing. A small lot of HRC (around 5,000 mt) has been booked at $545-548/mt CFR.
During the given week, HRC futures prices have edged down, exerting a negative impact on prices in the local Chinese HRC spot market. Most traders hold cautious and bearish sentiments as regards the future prospects for the HRC market, and so they have chosen to sell at lower prices. Demand for HRC is anticipated to be slack in the near future, and so it is thought that HRC prices in the Chinese domestic market will likely soften in the coming week.
Domestic HRC prices in China are at RMB 3,460-3,520/mt ($508-516.5/mt) ex-warehouse on June 9, with the average price level RMB 20/mt ($2.9/mt) lower compared to that recorded on June 2, according to SteelOrbis’ data.
As of June 9, HRC futures at Shanghai Futures Exchange are standing at RMB 3,361/mt ($493/mt), decreasing by RMB 38/mt ($5.6/mt) or 1.1 percent since June 2, while down 0.59 percent compared to the previous trading day, June 8.
| Product | Spec | Quality | City | Origin | Price（RMB/mt） | W-o-w change |
| HRC | 5.75mm*1500*C | Q235B/SS400 | Shanghai | Angang | 3,520 | -30 |
| Tianjin | Baotou Steel | 3,460 | -10 | |||
| Lecong | Liuzhou Steel | 3,520 | -20 | |||
| Avg | 3,500 | -20 | ||||
| HRC | 2.75mm*1250*C | Q235B | Shanghai | Angang | 3,630 | -30 |
| Tianjin | Baotou Steel | 3,520 | -10 | |||
| Lecong | Angang | 3,600 | -20 | |||
| Avg | 3,583 | -20 |
$1 = RMB 6.8147
