Ex-China HRC prices fall sharply again, more declines expected with traders going short

Ex-China HRC offer prices have moved down further amid the prevailing bearish sentiments and big declines in local and futures HRC prices. Meanwhile, the gap between offers from traders and mills has continued to widen, and, considering Chinese traders’ readiness to provide significant discounts, trade activity has slightly improved not only in the traditional markets like Vietnam, but also in higher-priced destinations.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $520-535/mt FOB for mainly December shipment, with a midpoint at $527.5/mt FOB, down by $22.5/mt over the past week. “This week has brought another fall, as we all expected, but given even more significant discounts from Chinese traders, we feel that Chinese mills will accept below $500 /mt FOB very soon,” a market insider told SteelOrbis.

At the same time, the tradable level for ex-China SS400 has been heard at $475-520/mt FOB, from $505-530/mt FOB last week. The lower end of the range corresponds to Chinese traders’ offers, who are trying to sell short in Vietnam. In particular, most offers for ex-China SS400 HRC have dropped to $500-510/mt CFR Vietnam, down by $25-35/mt week on week, though some sources have already reported a few deals signed at as low as $490/mt CFR Vietnam. Ex-China SS400 HRC offers to Pakistan have been voiced at $500-510/mt CFR, down by $25/mt week on week.

Meanwhile, Chinese suppliers have also continued to decrease their offers for higher-priced destinations, with several deals done at lower levels. In particular, following several deals for around 50,000/mt in total signed with Turkish buyers at $570/mt CFR last week, more deals for more than 50,000/mt in total have been reported this week at $520-525/mt FOB from Chinese mills this week, which translates to around $560-570/mt CFR. Besides, ex-China HRC offers have been reported in the Middle East at $560-580/mt CFR, down by $10-30/mt week on week, which is considered the most competitive level among all foreign suppliers in the region.

During the given week, HRC prices in the Chinese domestic market have moved on a declining trend amid the prevailing bearish sentiments among market players. Besides, the real estate industry has indicated a weak performance, negatively affecting market players. At the same time, the spread of Covid-19 and the related restriction measures have exerted additional pressure on the HRC market. Thus, it is expected that HRC prices in the Chinese domestic market will edge down further in the coming week.

Domestic HRC prices in China are at RMB 3,620-3,690/mt ($503.0-512.5/mt) ex-warehouse on November 1, with the average price level RMB 134/mt ($18.6/mt) lower as compared to October 25, according to SteelOrbis’ data. 

As of November 1, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,553/mt ($493.5/mt), decreasing by RMB 70/mt ($9.7/mt) or 1.9 percent since October 25.

$1 = RMB 7.2081