Ex-China HRC prices fall further as futures still decline, customers seek more discounts

This week, Chinese HRC suppliers including big and smaller mills, as well as traders, have kept correcting their offers down for overseas buyers, given the lack of significant support from the domestic market and the continuous declines in futures HRC prices. At the same time, despite the drop in prices, most buyers have been holding back from concluding new purchases so far, bidding at lower levels instead.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $565-580/mt FOB, with the midpoint at $572.5/mt FOB, down by $2.5/mt week on week. In the meantime, offers from smaller mills have been mainly heard at $540-550/mt FOB levels, down by around $5/mt over the past week. However, according to sources, some offers like those from Anfeng Steel have been voiced at an even lower level, at $533/mt FOB.
Tradable SS400 HRC prices have settled at $530-550/mt FOB, down by $5/mt over the past week, with the lower end of the range corresponding to offers in Vietnam at $542-545/mt CFR, against $545-550/mt CFR last week, while several deals for Q195 HRC have been reported at $537-540/mt CFR for April shipment. “There is no business activity, not just because of buyers, who are refraining from purchases, but also because of the mills. We have not heard any big offers from large Chinese mills so far,” a market insider told SteelOrbis.
Ex-China SS400 HRC offers in Turkey have been voiced at $575-580/mt CFR, down by $5-10/mt over the past week. Besides, offers from Chinese traders and second-tier mills in the Middle East have been reported at $570-580/mt CFR, against $590/mt CFR last week, while offers from first-tier mills have settled at $590/mt CFR, down by $10/mt week on week.

Meanwhile, average HRC prices in the Chinese domestic market have continued their downtrend amid sluggish demand from downstream users. In particular, domestic HRC prices in China are at RMB 3,990-4,120/mt ($562-580/mt) ex-warehouse on March 5, with the average price level RMB 13/mt ($1.8/mt) lower compared to that recorded on February 27, according to SteelOrbis’ data. 

During the given week, import iron ore and coke prices have indicated downward trends, weakening the support for HRC prices from the cost side. At the same time, demand for HRC from downstream users has been insufficient due to the widespread rainy weather in China. With the report on the work of the Chinese government released, China has set targets for 2024, with no stimulus policies significantly exceeding expectations, which has exerted a negative impact on market sentiments. As demand is lower than in previous years, HRC prices have been unable to continue their rebounding trend.

As of March 5, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,857/mt ($543/mt), decreasing by RMB 80/mt ($11.3/mt) or 2.0 percent since February 27, though declining by 0.41 percent compared to the previous trading day (March 4).

$1 = RMB 7.1027