Ex-China HRC prices keep falling amid continuous drops in local and futures prices

Chinese HRC exporters have continued to lower their prices this week given the ongoing declines in local and futures prices, coupled with tough competition with other foreign suppliers, especially in Asia. However, despite the decrease most Chinese suppliers have failed to attract customers due to a further slowdown in demand.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $585-600/mt FOB for October shipment, with a midpoint at $592.5/mt FOB, which decreased by $12.5/mt week on week, At the same time offers from smaller mills have been reported at as low as $570/mt FOB, down by $15-20/mt week on week.

Meanwhile, the tradable level for ex-China SS400 HRC has also declined over the past week to $555-580/mt FOB, depending on destination, versus $570-605/mt FOB last week. According to market insiders, Chinese traders who increased their offers for SS400 HRC to $600/mt CFR Vietnam last week, this week have rolled back their offers to $585/mt CFR. Though most bids have been voiced at $570-575/mt CFR Vietnam this week.

In the SAE1006 HRC segment, the situation has not changed much in terms of demand since the beginning of August. In particular, the indicative offer level for ex-China SAE1006 HRC has been reported at $610-615/mt CFR Vietnam, compared to $620/mt CFR last week. However, new offers have attracted zero interest, considering more attractive offers coming from Taiwan, India and even Japan. Market insiders have also reported about ex-China HRC offers in South America at $680-700/mt CFR, though business activity has been muted in the region, while most buyers have been expecting that prices would fall further.

At the same time, downtrend in HRC futures prices weakened the support to local HRC prices in China. During the given week, HRC futures prices have edged up first, though moved down over the past two trading days. At the same time, weak downstream demand has also been affecting HRC prices in the spot market. However, China issued policies to boost the real estate market, which will likely stimulate the demand for HRC in the near future.  

Domestic HRC prices in China are at RMB 3,910-4,040/mt ($568-587/mt) ex-warehouse on August 30, with the average price level RMB 33/mt ($4.8/mt) lower as compared to August 23, according to SteelOrbis’ data. 

As of August 30, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,885/mt ($565/mt), decreasing by RMB 66/mt ($9.6/mt) since August 23, and down RMB 176/mt ($25.6/mt) since Friday, August 26. 

$1 = RMB 6.8802