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 a number of traders, have kept correcting their offers slightly down for overseas buyers, given the lack of significant support from the domestic market and the continuous declines in HRC futures 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.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $530-540/mt FOB, with a midpoint at $525/mt FOB, down by $5/mt week on week. At the same time, offers from smaller mills have been mainly heard at $520-525/mt FOB. “Offers from Anfeng are at $520/mt FOB, while from Baotou they have been heard at $522/mt FOB this week,” a market insider said.

Meanwhile, tradable SS400 HRC prices have settled at $515-525/mt FOB, against $515-530/mt FOB last week. Offers in Vietnam and Pakistan have been voiced at $530-535/mt CFR, and at $545-550/mt CFR, respectively, mainly the same as last week, though ex-China offers in the Middle East have decreased slightly by $5-10/mt to $565-570/mt CFR UAE and to $565-570/mt CFR Turkey. According to sources, a several deals were signed in the Middle East at $528-530/mt FOB last week, which translates to around $568-575/mt CFR.

In the meantime, average HRC prices in the Chinese domestic market have edged down slightly amid declining futures prices and the ongoing sluggish demand from downstream users. Specifically, domestic HRC prices in China are at RMB 3,820-3,930/mt ($537-553/mt) ex-warehouse on June 11, with the average price level RMB 6/mt ($0.8/mt) lower compared to that recorded on June 4, according to SteelOrbis’ data. 

During the given week, the heavy rains in southern China have exerted a negative impact on the demand for HRC, resulting in decreasing prices. At the same time, following the Dragon Boat Festival, cautious sentiments have prevailed among market players, also negatively affecting the HRC market. It is expected that HRC prices in the Chinese domestic market will likely edge down further in the coming week.

As of June 11, HRC futures at Shanghai Futures Exchange are standing at RMB 3,766/mt ($530/mt), decreasing by RMB 22/mt ($3.1/mt) or 0.6 percent since June 4, while down 1.62 percent compared to the previous trading day, June 7. 

$1 = RMB 7.1135