Ex-China HRC prices from mills fall further, traders mostly keep offers stable

The decreasing trend of ex-China HRC prices has been showing some signs of a slowdown in recent days as some rebounds have been seen in HRC futures prices, though as of Tuesday, May 30, ex-China HRC quotes from mills have decreased again following a new drop in futures prices. At the same time, most Chinese traders have decided to maintain their offers relatively unchanged in most of the main trade destinations. 

At present, export offers for boron-added SS400 HRC from the large major Chinese mills are at $540-565/mt FOB, for July shipment, with a midpoint at $552.5/mt FOB, losing $7.5/mt over the past week. “The lowest prices have been heard at $540/mt FOB from such mills as Baotou and Jingye, others are offering at $550-565/mt FOB, and only Banxi Steel has announced its new prices at $590/mt FOB, which looks more like a joke,” a market insider told SteelOrbis. 

“Some rebound has been appearing, but it has not received any support. I feel prices would keep stable as there is no support for an increase but no room for big drop either,” a Chinese trader said. 

At the same time, smaller mills and traders in China have decided to maintain their offers mainly unchanged over the past week, and so the tradable level for ex-China SS400 HRC has been heard at $520-535/mt FOB. Offers for ex-China SS400 HRC in Vietnam have been voiced at $530/mt CFR, the same as last week, with bids reported at $525/mt CFR. Meanwhile, ex-China Q195 HRC offers in Turkey have settled at $565-575/mt CFR, the same as at the end of last week and down by $5-15/mt as compared to offers at the beginning of last week. Furthermore, suppliers from the Middle East, the UAE in particular, have been reporting ex-China SS400 HRC offers at $570-580/mt CFR from traders and at $605-610/mt CFR from first-tier Chinese mills. In the meantime, a deal for around 2,000-5,000 mt of ex-China SS400 HRC was reported in Pakistan at $530/mt CFR last week, while fresh ex-China HRC offers have remained at the same level this week. 

In the SAE1006 HRC segment, Chinese suppliers have also been stable in their offers to Vietnam at $560-570/mt CFR. 

Meanwhile, HRC prices in the Chinese domestic market have moved down amid the downtrend in HRC futures prices and slack demand from downstream users. More specifically, during the given period, the supply of HRC has risen, while the demand from downstream users has remained sluggish, which has resulted in the prevailing cautious sentiments among market players. Meanwhile, the declining trend of inventory levels has slowed down, also exerting a negative impact on the HRC market. Moreover, demand for HRC is unlikely to improve in the near future due to hotter weather. At the same time, iron ore prices have edged down again on May 30, which may weaken the support for HRC prices from the cost side. Thus, it is expected that HRC prices in the Chinese domestic market will edge down slightly in the coming week. 

Domestic HRC prices in China are at RMB 3,670-3,900/mt ($518-551/mt) ex-warehouse on May 30, with the average price level RMB 60/mt ($8.5/mt) lower compared to that recorded on May 23, according to SteelOrbis’ data.  

As of May 30, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,572/mt ($504.5/mt), decreasing by RMB 79/mt ($11.1/mt) or 2.2 percent since May 23. 

$1 = RMB 7.0818