Despite a slight recovery in domestic and futures HRC prices, most Chinese HRC exporters rolled over their prices this week, with only few producers, who offered at the highest level among all suppliers last week, going lower to attract customers. At the same time, Chinese traders’ mood has slightly improved following some rises in futures, according to the market insiders.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $590-610/mt FOB for August shipment, with a midpoint at $600/mt FOB, which decreased by $2.5/mt week on week. “Chinese mills’ HRC has remained mainly unchanged over the past week, only some mills have slightly dropped the prices to reach all others’ level,” a market insider stated. At the same time, offer prices from major Chinese producer Shagang Steel have been reported at $630/mt FOB, down by $20/mt week on week.
Meanwhile, earlier this week higher futures prices have provided some support for local HRC prices, which, therefore, has also changed sentiment of Chinese traders. Thus, the tradable level for ex-China SS400 HRC has been heard at $560-600/mt CFR, depending on destination, up by $10/mt from the lower end of the range week on week. In particular, Chinese traders who offered SS400 HRC at $580-590/mt CFR Vietnam last week, have increased their offers to $590-600/mt CFR this week, while Vietnamese customers’ bids have also risen by $10/mt to $575/mt CFR. Besides, ex-China SS400 HRC offers have been reported at around $625-635/mt CFR Pakistan, up by $10-15/mt over the past week.
At the same time, demand for higher quality coils has continued to slow down. In particular, ex-China SAE1006 HRC has been offered to Vietnam at $610-620/mt CFR, same as last week, while ex-China offers to the Middle East have remained at $640-660/mt CFR. Meanwhile, the latest offers to South America have been voiced at around $685-700/mt CFR, compared to $750/mt CFR last week. According to the market insiders, the situation in the South American market differs from other markets, and Chinese suppliers have been the most aggressive among all suppliers and therefore have succeeded in signing several deals.
During the given week, HRC prices in the Chinese domestic market have seen certain rises amid the improved transaction activities. Recently, the executive meeting of the State Council claimed that China will continue to issue policies, aiming to expand the effective demand from downstream users, boosting market players’ sentiments to some extent. However, demand remained slack in the traditional offseason. Moreover, the sporadic outbreaks of the Covid-19 pandemic still exerted a negative impact on the HRC market. It is thought that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.
Domestic HRC prices in China are at RMB 3,830-3,890/mt ($567-576/mt) ex-warehouse on July 26, with the average price level RMB 30/mt ($4.4/mt) higher as compared to July 19, according to SteelOrbis’ data.
As of July 26, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,874/mt ($574/mt), increasing by RMB 119/mt ($18/mt) or 3.2 percent since July 19.
$1 = RMB 6.7483