Ex-China HRC prices largely stable, but softer futures and absent Gulf buyers exert pressure on exporters

Offers for ex-China HRC have remained largely stable over the past week. Major mills have maintained relatively firm and elevated offer levels, while smaller mills and traders have kept prices broadly unchanged, with some showing a slight downward bias. Market sentiment has remained subdued, as overseas demand has provided weak support, while declining futures prices have further weighed on buying interest. Besides, freight has remained an issue, while the absence of Gulf buyers amid the ongoing war has continued to affect Chinese exporters. 

More specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $490-500/mt FOB, with a midpoint at $495/mt FOB, the same as last week. However, offers from smaller private mills have been voiced at around $480-490/mt FOB, compared to $485-495/mt FOB last week. “Offers are varying from mill to mill, with the prices from such mills as Anfeng heard at $481/mt FOB, down by $9/mt since last week, while Angang and Shougang offer at $495-500/mt FOB,” a market insider told SteelOrbis.

Meanwhile, offers from Chinese traders have been estimated at $480-490/mt FOB, the same as last week. Ex-China 2,000 mm Q235 HRC offers in Vietnam are still rare due to the absence of non-VAT offers, with indicative offers with VAT for May shipment voiced at $500-505/mt CFR, mainly the same as last week. However, a deal prices for ex-China Q195 HRC has been reported at $487/mt CFR Vietnam, down by $4/mt week on week, according to sources. Furthermore, offers for ex-China Q195 HRC in Pakistan have been estimated at $505-506/mt CFR for May shipment, the same as last week.

Chinese Q195 HRC offers through traders to Turkey have been estimated at $535-540/mt CFR, mainly the same as last week, which translates to around $480-490/mt FOB. In the meantime, most Chinese mills are still not issuing new export offers to Gulf buyers as freight conditions and insurance coverage for vessels transiting the Strait of Hormuz remain unclear. 

In the meantime, average HRC prices in the Chinese domestic market have edged down slightly compared to the previous week amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,350-3,430/mt ($485.5-497/mt) ex-warehouse on March 31, with the average price level RMB 4/mt ($2.5/mt) lower compared to that recorded on March 24, according to SteelOrbis’ data.

During the given week, demand for HRC from downstream users has improved, while restocking activities have remained subdued. Cautious sentiments prevail among market players, exerting a negative impact on HRC prices. Meanwhile, on March 31, coking coal futures prices have seen a big decrease of 5.71 percent, while coke futures prices have decreased by 3.13 percent compared to the previous trading day, weakening the support for HRC prices from the cost side. The ongoing war in the Middle East has negatively affected the HRC market. Inventories of HRC have shifted from rises to declines, reflecting improved demand, while inventories are still at relatively high levels.

As of March 31, HRC futures at Shanghai Futures Exchange are standing at RMB 3,294/mt ($477/mt), decreasing by RMB 30/mt ($4.3/mt) or 0.9 percent since March 24, while decreasing by 0.33 percent compared to the previous trading day, March 30.

$1 = RMB 6.9194