Ex-China HRC prices hit by new futures price slump, future price trend unclear

HRC offers from big Chinese mills and local traders have shown some negative bias affected by declines in local and futures prices mainly since the market's response to the government's new stimulus measures announced last Friday has been unfavourable, as expectations were once again overly optimistic and the actual results have fallen short. At the same time, the Chinese market is entering its slower, winter phase, with both demand and supply weakening, while most buyers find it difficult to see a clear price direction as all are very cautious and are refraining from purchases.

At present, offers from big mills for boron-added SS400 HRC have settled at $500-510/mt FOB for December shipment, with a midpoint at $505/mt FOB, down by $12.5/mt as compared to offers heard at the beginning of last week. Meanwhile, offers from smaller mills have been estimated at $490-500/mt FOB, against $500-510/mt FOB last week.

At the same time, the tradable prices for SS400/Q235 HRC have been estimated at $482-490/mt FOB, versus $500-510/mt FOB last week. More specifically, offers for ex-China SS400/Q235 HRC in Vietnam have been voiced at $495-500/mt CFR, down by $10/mt since yesterday and down by $15/mt week on week. Furthermore, offers for SS400 HRC in the Middle East have been voiced at $530-535/mt CFR, down by $5-10/mt over the past week, while offers through traders for ex-China Q195 HRC in Turkey have dropped to $522-527/mt CFR, down by $13/mt week on week.

Meanwhile, during the given week, HRC prices in the Chinese domestic market have moved on a downtrend amid declining HRC futures prices and cautious sentiments among market players. Specifically, domestic HRC prices in China have settled at RMB 3,570-3,610/mt ($496.5-502/mt) ex-warehouse on November 12, with the average price level RMB 63/mt ($8.8/mt) lower compared to that recorded on November 5, according to SteelOrbis’ data.

On November 8, Lan Fo’an, China’s finance minister, stated that China will add RMB 6 trillion ($0.84 trillion) to refinance local government debts up to the end of 2026. Also, the limit for issuance of special bonds for local governments will increase from RMB 29.52 trillion ($4.1 trillion) to RMB 35.52 trillion ($5 trillion). However, most market players said the stimulus package was not as strong as they had expected, and so the HRC market has been negatively impacted. Besides, both supply of and demand for HRC are weak at present. Moreover, major steelmakers, including Baosteel and Anshan Iron and Steel Group, have announced stable ex-works prices for HRC for delivery in December, signalling caution as regards the future prospects for the market.

As of November 12, HRC futures at Shanghai Futures Exchange are standing at RMB 3,515/mt ($489/mt), decreasing by RMB 76/mt ($10.6/mt) since November 5, while up 0.03 percent compared to the previous trading day, November 11.

$1 = RMB 7.1927