Ex-China HRC prices follow decline in local market, buyers’ bids keep dropping

Despite some slight rebound in futures HRC prices seen in China at the end of last week, this week has once again started with another drop in both futures and local HRC prices. Thus, ex-China hot rolled coil (HRC) offer prices have declined over the past week both from big Chinese mills and traders, while more bids have been heard at lower levels this week, especially in Asia. 

At present, export offers for boron-added SS400 HRC given by major Chinese mills have come down to $655-675/mt FOB, with a midpoint at $665/mt FOB, down by $5/mt week on week. At the same time, smaller mills have been offering their materials at around $625-640/mt FOB, down by $5-20/mt, depending on the mill, over the past week. “Shagang Steel has dropped its offers by $10/mt to $655/mt FOB, while mills such as Bengang and Yagang have decreased their prices to $675/mt FOB. Anfeng Steel, however, has decreased its HRC prices to $625/mt FOB, from $635/mt FOB,” a local trader told SteelOrbis. 

At the same time, the tradable level for ex-China SS400 HRC has been heard at around $615-640/mt FOB, the same as last week. However, according to sources, some Chinese traders, who avoid taxes by practicing non-VAT trade, have been offering at $620/mt CFR in Vietnam, which means around $610/mt FOB. “Most ex-China SS400 offers have remained at $625-635/mt CFR Vietnam, the same as last week, but customers are already bidding at $610-615/mt CFR,” a Chinese trader said. Furthermore, ex-China SS400 HRC offers in Pakistan have been voiced at $645/mt CFR, versus deal prices at $650-660/mt CFR last week. Meanwhile, a deal for 15,000 mt ex-China HRC has been reported in Turkey at $645/mt FOB (or around $675-685/mt CFR), while customers in the Middle East have received ex-China offers at stable levels of $680-700/mt CFR. 

Meanwhile, ex-China offers for SAE1006 HRC have decreased this week to $675-680/mt CFR Vietnam, down by $5-10/mt week on week, with customers’ bids voiced at $665/mt CFR and below. Furthermore, according to sources, a deal for around 7,000 mt of ex-China materials has been reported in the UAE at $720/mt CFR, though this information has not been confirmed by the time of publication. Ex-China SAE1006 HRC offers in South America have been heard at $695/mt CFR Pacific Coast, compared to $695-710/mt CFR last week. 

In the meantime, average HRC prices in the Chinese domestic market have continued their downtrend amid cautious sentiments among market participants. In particular, domestic HRC prices in China are at RMB 4,300-4,370/mt ($626-636/mt) ex-warehouse on April 4, with the average price level RMB 36/mt ($5.3/mt) lower compared to March 28, according to SteelOrbis’ data.  

According to sources, HRC futures prices at Shanghai Futures Exchange (SHFE) have indicated a downward movement, exerting a negative impact on HRC prices in the spot market. At the same time, the relatively high levels of raw material prices have reduced HRC producers’ profitability. Meanwhile, major Chinese steelmaker Baosteel maintained its ex-works prices for HRC unchanged, signaling market players’ wait-and-see stance. April is regarded as the traditional peak season for the steel industry, while the rainy weather will add uncertainty to the HRC market. 

As of April 4, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,135/mt ($602/mt), decreasing by RMB 120/mt ($17.5/mt) or 2.82 percent since March 28. 

$1 = RMB 6.8699