Ex-China HRC prices keep falling sharply as sellers hungry for orders, seeing weak demand everywhere

Ex-China HRC offer prices have moved down further amid the prevailing bearish sentiments and the big declines in local and futures HRC prices. Despite Chinese sellers’ readiness to provide significant discounts, trade activity has remained muted due to relatively sluggish demand in most main destinations coupled with tough competition with other Asian suppliers, especially in higher-priced destinations.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $540-560/mt FOB for mainly December shipment, with a midpoint at $550/mt FOB, down by $7.5/mt week on week. However, according to market insiders, some small mills have been offering at around $520/mt FOB. “Chinese mills are negotiating on bid basis mainly, since the market keeps going down,” a market insider stated.

Meanwhile, the tradable level for SS400 HRC has dropped to $505-530/mt FOB, down by $10-15/mt over the past week. Most offers for ex-China SS400 HRC have dropped to $535/mt CFR Vietnam for December shipment, down by $5-10/mt week on week, while materials for January shipment have already been offered at $520-525/mt CFR from some Chinese suppliers. However, rare offers for SS400 coils for November shipment have been voiced at $540/mt CFR Vietnam. “We actually believe that deals could be done at $510-515/mt CFR Vietnam given the current slow buying and most Vietnamese customers’ bids,” an international trader told SteelOrbis. Ex-China SAE1006 HRC offers from traders to Vietnam have been voiced at around $560/mt CFR, compared to $565-570/mt CFR at the beginning of last week.

At the same time, Chinese suppliers have also continued to decrease their offers for higher-priced destinations, though trade has remained slow given tough competition with other suppliers, especially from South Korea. In particular, offers for ex-China Q195 HRC have been voiced in Turkey at $580-590/mt CFR, down by $10/mt week on week. Besides, ex-China HRC offers have been reported in the Middle East at $590/mt CFR, down by $20/mt over the past week. Furthermore, market insiders have reported offers for ex-China HRC in South America at around $590-600/mt CFR, though the competition has become more aggressive, with South Korean suppliers, who have dropped their offers by around $50/mt to $590/mt CFR as well, pushing the whole market down.

During the given week, HRC prices in the Chinese domestic market have moved down affected by the declining HRC futures prices and the negative impact from the Covid-19 pandemic, which has slackened the demand from downstream users and affected the transportation of HRC supplies. Currently, market players mostly hold a cautious view of the future prospects for the HRC market. At the same time, inventory levels of HRC have seen an increasing trend, exerting a negative impact on prices. Thus, according to market insiders, HRC prices in the Chinese domestic market may edge down further in the coming week.

Domestic HRC prices in China are at RMB 3,780-3,800/mt ($527.0-530.0/mt) ex-warehouse on October 25, with the average price level RMB 46/mt ($6.4/mt) lower as compared to October 18, according to SteelOrbis’ data. 

As of October 25, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,623/mt ($505/mt), decreasing by RMB 67/mt ($9.3/mt) or 1.8 percent since October 18.

$1 = RMB 7.1668