Ex-China HRC prices mainly stable from mills, but mood worsens on falls in local and futures prices

Although this week most big Chinese mills have decided to roll over their export prices, sentiments among Chinese traders have worsened this week following the sharp drops in futures and local prices in China. As a result, the tradable level has decreased by around $10/mt as compared to traders’ offers at the end of last week.

At present, export offers for born-added SS400 HRC given by major Chinese mills are at $590-600/mt FOB, the same as last week, while a few big producers have continued to maintain their offers at even $605-610/mt FOB. Besides, small mills have kept offering at around $580/mt FOB.

Meanwhile, following the significant increase in HRC export offers seen last week, at the beginning of this week signs of falling prices have emerged in the market as Chinese traders have started to cut their offers given the sharp falls in futures prices. Thus, the tradable level for ex-China SS400 HRC has settled at $570-580/mt FOB, the same as at the beginning of last week, but down by $10/mt compared to the end of last week. Vietnamese suppliers have reported ex-China SS400 HRC offers at $580-585/mt CFR, from $590-600/mt CFR offered last week. Meanwhile, after a deal for around 2,000-5,000 mt of ex-China SS400 HRC was signed at $615/mt CFR Karachi at the end of last week, up by $25/mt week on week, this week new offers for ex-China SS400 HRC have been reported at $600/mt CFR, and some at even as low as $590/mt CFR. Ex-China SS400 HRC offers to the UAE have been reported at around $630-640/mt CFR.

In the SAE1006 HRC segment, however, Chinese suppliers have been more restrained, offering materials to Vietnam at $610-620/mt CFR, the same as last week. Besides, ex-China SAE1006 HRC offers to Pakistan have reached $620-635/mt CFR Karachi, versus $615-620/mt CFR last week. Furthermore, market insiders have reported a number of deals done with buyers in South America, from Colombia and Chile in particular, at around $630/mt CFR, while most ex-China offers have settled at $650/mt CFR Pacific Coast, up by $20/mt week on week.

Meanwhile, this week HRC prices in the Chinese domestic market have fluctuated within a certain range, indicating big declines on December 19, amid the sharp decreases in HRC futures prices. Although the strict quarantines have been lifted, due to the rapid spread of the Covid-19 pandemic, a labor shortage has negatively affected the operation of the market. Moreover, this situation will likely worsen in the near future as many regions will face peaks of infection, which will result in the further shortage of labor, especially amid the approach of the Chinese New Year holiday. However, the high levels of raw material prices will bolster HRC prices.

Domestic HRC prices in China are at RMB 3,980-4,110/mt ($570-589/mt) ex-warehouse on December 20, with the average price level RMB 30/mt ($4.3/mt) lower than that recorded on December 13, and down by RMB 115/mt ($17/mt) since December 16, according to SteelOrbis’ data.

As of December 20, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,996/mt ($572.5/mt), decreasing by RMB 36/mt ($5.2/mt) or 0.9 percent since December 13.

  $1 = RMB 6.9861