Ex-China HRC prices from mills mainly stable, but tradable level rises in new deals globally

Chinese HRC mills, who decreased their offers prices last week, have this week mostly maintained their offers at unchanged levels. The continuous fluctuations and slight recovery in HRC local and futures prices have provided some support for the market mood, while the tradable level has been corrected up in numerous deals this week as most sellers have decided to secure more bookings at higher price levels before leaving the market for the holiday.

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $555-570/mt FOB, the same as last week. “Rizhao keeps offering at $565/mt FOB, Shandong at $555/mt FOB, Benxi’s official offers are at as high as $580/mt FOB, but in their [Benxi] deals prices have been heard at around $560/mt FOB, up by $5-10/mt over the past week,” a market insider said.

At the same time, Chinese HRC suppliers have managed to sell sizable volumes globally, while the tradable prices have increased to $545-560/mt FOB, depending on the destination, up by $10/mt week on week. The lower end of the range corresponds to ex-China SS400 HRC offers in Vietnam at $555-560/mt CFR, up by $10-20/mt week on week, while offers for Q195 have been heard $545-550/mt CFR, up by $5-10/mt. At the same time, while trade has remained slow in Vietnam, Chinese suppliers have managed to succeed in new sales to Pakistan. In particular, after last week around 5,000-8,000 mt of SS400 HRC were sold at $550-555/mt CFR, this week the material has changed hands at $565/mt CFR for end-of-October shipment.

According to sources, sizable volumes of around 100,000 mt in total have been sold to India at $575-585/mt CFR during the last two weeks, while at the end of last week-beginning of this week deal prices increased to $588-590/mt CFR. Besides, more deals have been reported in the Middle East and South Asia. “Around 50,000 mt in total have been sold in the Middle East and South Asia at $560-562/mt FOB,” a Chinese trader told SteelOrbis. In particular, according to sources, 10,000 mt of ex-China SS400 HRC are reported to have been sold to Oman at $585/mt CFR, up by $10/mt week on week, while new deals have also been heard in the UAE at $580-585/mt CFR, versus $570-580/mt CFR last week.

More trade activity has also been reported in the SAE1006 HRC segment, with around 10,000 mt sold to Vietnam at $580/mt CFR this week. Besides, another deal for 10,000 mt of ex-China SAE1006 HRC has been reported at $580/mt CFR in Pakistan.

Meanwhile, average HRC prices in the Chinese domestic market have moved up amid the improved sentiments among market players. Specifically, domestic HRC prices in China are at RMB 4,060-4,100/mt ($566-572/mt) ex-warehouse on September 19, with the average price level RMB 47/mt ($6.6/mt) higher compared to that recorded on September 12, according to SteelOrbis’ data.

During the given week, since the long National Day holiday (September 29-October 6) is approaching, downstream users need to build up stocks, providing solid support for HRC prices. However, HRC producers’ capacity utilization rates are at relatively high levels, exerting a negative impact on prices from the supply side. Meanwhile, production restrictions may not be implemented strictly in the short term, which will negatively affect the HRC market. The growth in HRC consumption may be slower than the growth in supply. It is thought that HRC prices in the Chinese domestic market may indicate a fluctuating trend within a limited range.

As of September 19, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,933/mt ($548.5/mt), increasing by RMB 51/mt ($7.1/mt) or up by 1.3 percent since September 12.

$1 = RMB 7.1733