Chinese HRC exporters have continued to lower their prices this week given the big declines in local and futures prices, coupled with bearish sentiments and slack demand. Besides, the outlook for steel prices remains rather negative at least for the coming weeks due to bad weather conditions coupled with the continuing Covid-19 pandemic in China and extremely weak demand overseas.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $590-615/mt FOB for August shipment, with a midpoint at $602.5/mt FOB, which decreased by $42.5/mt week on week. At the same time, offer prices from major Chinese producer Shagang Steel have been reported at $650/mt FOB, though, according to market insiders, "this level does not reflect the real market price and is negotiable if someone wants to buy".
"After major Chinese steelmakers cut their ex-works offer prices for HRC for delivery in August, HRC prices in the spot market lost some support and moved down, while the declining iron ore prices also negatively affected HRC prices from the cost side," an international trader told SteelOrbis.
Meanwhile, the tradable level for ex-China SS400 HRC has been heard at $550-600/mt FOB, depending on the destination, down by $30-50/mt week on week. In particular, the lower end of the range corresponds to Chinese traders' offers in position to Vietnam, which have settled at $580-590/mt CFR, down by around $50/mt over the past week. Besides, several deals for small tonnages were reported at $580/mt CFR Vietnam at the end of last week and this week. Furthermore, several contracts for ex-China SS400 HRC are reported to have been done at $615-620/mt CFR Pakistan this week, down by $15-20/mt week on week.
At the same time, demand in the higher-priced destinations has continued to slow down. Chinese SAE1006 HRC suppliers have decreased their offers to Vietnamese customers by $40/mt week on week to $610-620/mt CFR. Besides, ex-China SAE1006 HRC 1.2 mm has also been offered to the Middle East at around $690/mt CFR, down by around $30/mt week on week. Furthermore, the latest offers to South America have been voiced at around $750/mt CFR, down by $20/mt over the past week.
During the given week, HRC prices in the Chinese domestic market have moved down, though they have indicated rises over the past two trading days amid a slight recovery in HRC futures prices, which had tumbled by around $50/mt at the end of last week. Oversupply has exerted a negative impact on the HRC market, and so traders have been willing to cut prices and reduce their inventory levels. Domestic HRC prices in China are at RMB 3,810-3,850/mt ($564-570/mt) ex-warehouse on July 19, with the average price level RMB 194/mt ($29/mt) lower as compared to July 12, according to SteelOrbis' data.
As of July 19, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,755/mt ($556/mt), decreasing by RMB 161/mt ($24/mt) or 4.1 percent since July 12.
$1 = RMB 6.7451