Ex-China HRC offer prices have moved down further amid the prevailing bearish sentiments and the big declines in local and futures HRC prices. Despite Chinese sellers’ readiness to provide significant discounts, trade activity has remained muted due to sluggish demand in most main destinations.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $640-650/mt FOB for August shipment, with a midpoint at $645/mt FOB, down by $25/mt week on week. However, according to market insiders, some second and third tier Chinese mills have even been offering at around $600/mt FOB. “Chinese mills are negotiating on a bid basis only, since the market keeps going down,” a market insider stated.
“Major Chinese steelmakers have cut their prices for HRC for delivery in August, weakening the support for HRC prices in the spot market. Moreover, ferrous metal futures prices have indicated further sharp declines, exerting a negative impact on the HRC market,” an market insider told SteelOrbis.
Meanwhile, the tradable level for SS400 HRC has dropped to $600-630/mt FOB, down by $10-30/mt week on week. Besides, some traders are even ready to go down further, offering at $590/mt FOB and even below. “Most offers for ex-China SS400 have dropped to $630/mt CFR Vietnam, but we have already started to hear $620/mt CFR and we actually believe that deals could be done at $610/mt CFR Vietnam as no one wants to buy,” an international trader told SteelOrbis. Ex-China SAE1006 HRC offers from traders to Vietnam have been voiced at $650-660/mt CFR Vietnam, compared to $670-680/mt at the beginning of last week.
During the given week, a widespread wave of hot weather has hit China, negatively affecting the steel market. Moreover, raw material prices have moved down, weakening the support for the HRC market. At the same time, high temperatures will continue for a certain period, which will slacken the demand for HRC. Thus, it is thought that HRC prices in the Chinese domestic market will continue to soften in the coming week.
Domestic HRC prices in China are at RMB 3,920-3,960/mt ($583-589/mt) ex-warehouse on July 13, with the average price level RMB 305/mt ($45/mt) lower as compared to July 6, according to SteelOrbis’ data.
As of July 13, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,917/mt ($583/mt), decreasing by RMB 321/mt ($47.7/mt) or 7.6 percent since July 6.
$1 = RMB 6.7246
