Ex-China HRC prices have remained uncompetitive in the international market amid slight rises by some mills over the past week. At the same time, though overall demand for HRC in the local market has been at relatively good levels, prices have indicated slight declines and sentiment is not very upbeat given the rainy season and fears of a second wave of the pandemic.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $450-465/mt FOB for late August shipment, up by $2.5/mt on average compared to last week as the upper end of the range has increased by $5/mt. The reference deal prices have been heard at $445-450/mt FOB, but this level has been too high for overseas customers.
For instance, the latest deal for 40,000 mt of Indian SAE1006 HRC has been done at $445/mt CFR in Vietnam. The highest possible price for SS400 coils should be $440/mt CFR Vietnam, sources have said. Offers for thinner SAE1006 HRC (2 mm) have increased in Vietnam to $460/mt CFR from Japan and South Korea, after some tonnage of ex-Taiwan HRC was traded at $450/mt CFR last week.
As a result, even despite the uptrend in the Southeast Asian HRC market, Chinese coils are priced much higher than material of other origins. “Though the rainy season in eastern and southern China has slackened the demand for HRC in the local market, steelmakers decided to push up their HRC offer prices for the export market, which made it very difficult for suppliers to achieve deals,” an international trader told SteelOrbis.
During the given week, demand for HRC in China has declined a little due to the weather conditions. Domestic HRC prices in China are at RMB 3,660-3,730/mt ($517.3-527.2/mt) ex-warehouse on June 16, with the average price level RMB 30/mt ($4.2/mt) lower as compared to June 9, according to SteelOrbis’ data.
Nevertheless, there are still some shortages of specific grades in some parts of China and overall demand has not been hit dramatically so far. At the same time, iron ore prices are fluctuating at high levels above $100/mt CFR, also providing solid support for HRC prices.
As reported earlier, Chinese steelmaker Baosteel decided to raise its local HRC base prices by RMB 280/mt ($40/mt) for delivery in July. It is expected that HRC prices in the Chinese domestic market will move sideways in the coming week.
As of June 16, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,565/mt ($504/mt), increasing by RMB 20/mt ($2.8/mt) or 0.56 percent since June 9. Minimal gains in futures prices and some slowdown of demand in the local market have resulted in a slackening of import HRC activity in China and major traders have decided to adopt a wait-and-see position, seeing higher offer prices from Indian and other exporters.
$1 = RMB 7.0755
