Ex-China HRC prices hit the bottom, today’s futures rebound gives hope for improvement

Prices for ex-China HRC in the global market were corrected down further early this week, following the negative mood in the local market on Friday and the desire of mills to push volumes abroad due to weak local sales. However, the situation in the Chinese market has started to change on Tuesday since futures prices have posted a strong rebound, local HRC prices have finally been corrected upwards, and market sources are now waiting for higher offers to overseas markets as well by the end of the week.

Export offers for boron-added SS400 HRC from most large Chinese mills have settled at $535-550/mt FOB, down by $15/mt on average over the past week. These prices have been confirmed by market sources as of early Tuesday, but “mills may test a $5-10/mt increase after the local market settled higher,” a trader said.

As for the tradable level for ex-China SS400 HRC, it has slipped by $7.5/mt over the past week, coming to $515-525/mt FOB. The lower end of the range represents the level seen in offers to Vietnam by early this week, while some lower prices have also been achieved in the Middle East market. In particular, import offers for SS400 HRC in Vietnam have settled at $525-535/mt CFR at the moment, which is in line with the previous deals reported last week. Following lower offers at $525/mt CFR on Monday, some sources have been starting to insist on $530-535/mt CFR, based on the rebound in futures prices. Offers for Q195 to Vietnam were at $515/mt CFR at the lowest.

Moreover, around 45,000 mt of ex-China Q195 have been traded to Turkey lately at around $553-554/mt CFR, moving down by $5-9/mt compared to offers a week ago.

The range for the latest offers from Chinese traders to the Middle East, the UAE in particular, have widened from $560-565/mt CFR to $550-570/mt CFR, with no deals reported so far.

During the past week, HRC producers’ profitability has shrunk, resulting in some of them delaying production resumptions and easing the pressure from the supply side to a certain degree. Iron and Steel Associations in Guangdong and Shandong provinces have issued notices to urge steelmakers to halt production activities, aiming to bolster steel prices. On March 19, HRC futures prices indicated a rise of 2.99 percent from the previous day, signaling improvements in market sentiments.

Domestic HRC prices in China are at RMB 3,850-3,930/mt ($542-553.5/mt) ex-warehouse on March 19, with the average price level RMB 37/mt ($5.2/mt) lower compared to March 12, according to SteelOrbis’ data. It is expected that HRC prices in the Chinese domestic market may rebound in the coming week following previous continuous decreases, with a RMB 35/mt increase seen in spot prices today compared to Monday.

As of March 19, HRC futures at Shanghai Futures Exchange are standing at RMB 3,788/mt ($536/mt), decreasing by RMB 16/mt ($2.3/mt) or 0.4 percent since March 12, while up 2.99 percent compared to the previous trading day, March 18.

$1 = RMB 7.0985