Ex-China HRC prices from mills mainly stable, but downward trend ends in local market on increasing futures

This week, most big Chinese steel producers have kept prices mainly unchanged despite rises in futures market, though traders, which dropped their offers at the beginning of last week, have decided to go higher. As a result, the tradable level for ex-China HRC have improved slightly. However, trade activity has been slow in most regions with only occasional deals reported given the uncertainty over the future price trend.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $590-600/mt FOB for mainly February shipment, same as last week, while several big producers have continued to maintain their offers at $610/mt FOB. “Most big mills have not changed their prices, though smaller mills and traders have decided to go higher, increasing their offers to $590/mt FOB and above from $580/mt FOB last week,” a market insider said.

At the same time the tradable level for ex-China SS400 HRC has been heard at $575-590/mt FOB, up by $5-10/mt week on week. Offers for SS400 coils to Vietnam have increased to $590-600/mt CFR, versus $580-585/mt CFR at the beginning of last week, though a deal for ex-China materials have been reported at $585/mt CFR this week. Besides, ex-China SS400 HRC to Pakistan have been voiced at around $600/mt CFR for February shipment, same as last week, while offers to the UAE and Turkey have been reported at around $630-640/mt CFR level.

In the SAE HRC segment, offer prices have remained relatively stable. Offers of this grade of coil to Vietnam have settled at $615/mt CFR, compared to $610-620/mt CFR last week. Chinese suppliers have also reported offers for SAE1006 HRC to Turkey at $640-660/mt CFR, depending on quantity. “We are offering SAE1006 HRC at $640/mt CFR Turkey this week, but without success as Russians are more aggressive there,” a Chinese trader told SteelOrbis. Furthermore, a deal for ex-China 1.2 mm HRC have been reported at $650/mt CFR UAE at the end of last week.

During the given week, HRC prices in the Chinese domestic market indicated an increasing trend, while transaction activities have been at low levels, though the supply from steelmakers’ side has been negatively affected by the mass infection of Covid-19 in China. Demand for HRC has been slack, and this situation will unlikely improve in a short term. The inventory of HRC has been at normal level, thereby market players have been cautious towards the prospect for the future HRC market. It is thought that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 4,010-4,130/mt ($577-594/mt) ex-warehouse on December 27, with the average price level RMB 25/mt ($3.6/mt) higher than that recorded on December 20, according to SteelOrbis’ data.

As of December 27, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,092/mt ($588.3/mt), increasing by RMB 96/mt ($13.8/mt) or 2.4 percent since December 20.

$1 = RMB 6.9546