Ex-China HRC prices from mills stable, but tradable level keeps falling amid futures price slump, low demand

Chinese HRC mills, who decreased their offers prices at the end of last week, have this week mostly maintained their offers at unchanged levels. Though the continuing pressure from falling futures and local HRC prices has been weighing on the mood of buyers, the tradable level has been corrected down once again this week.

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $570-580/mt FOB, the same as last week. “Shagang is offering at $580/mt FOB, Yangang at $575/mt FOB and, although Benxi’s official offer is at $590/mt FOB, it is ready to accept $570/mt FOB, down $5/mt week on week,” a Chinese mill’s representative told SteelOrbis.

Meanwhile, smaller Chinese mills have been offering their materials at around $560/mt FOB, though some mills such as Anfeng have been heard with offers to Vietnam at $548/mt FOB, or at around $558/mt CFR this week. At the same time, several traders have been offering SS400 HRC at as low as $555/mt CFR Vietnam, as of Tuesday, August 8, versus $560-565/mt CFR at the end of last week. Furthermore, ex-China HRC offers in the Middle East and Turkey have been heard at around $600-620/mt CFR from traders. Thus, the tradable level for ex-China SS400 have dropped by $5/mt week on week to $545-560/mt FOB.

“Steel supply has dropped below the expectations last week given the absence of a formal steel production restriction policy. Most people expect ongoing price weakness in the spot market as demand is likely to remain weak due to adverse weather conditions in August,” a market insider told said.

In the meantime, during the given week HRC prices in the Chinese domestic market have indicated a downtrend amid the decreasing HRC futures prices and the increasing inventory levels. In particular, local HRC prices in China are at RMB 4,090-4,110/mt ($571-574/mt) ex-warehouse on August 8, with the average price level RMB 43/mt ($6/mt) lower compared to that recorded on August 1, according to SteelOrbis’ data.

According to sources, heavy rains in northern China have negatively affected construction activities and transportation, while demand for HRC has also slackened. A wave of high temperatures has hit southern China, exerting a negative impact on market sentiments. Some sellers chose to sell at lower prices to bring in cash. It is thought that HRC prices in the Chinese domestic market may edge down in the coming week, while prices may indicate a rebounding trend in late August amid the good expectations for the traditional peak season of September and October.

As of August 8, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,948/mt ($571/mt), decreasing by RMB 140/mt ($19.6/mt) or down by 3.4 percent since August 1.

$1 = RMB 7.1565