Ex-China HRC prices mainly stable from mills but with some upward bias amid recovery in futures prices

As anticipated, the mood has changed slightly in the Chinese HRC market this week, with local and futures HRC prices showing some rebound which have resulted in improved sentiments among Chinese exporters as well. However, although most big Chinese mills have decided to maintain their offers at the same levels as last week, some of them have withdrawn the cheaper offers which were heard last week. Besides, some rebounds have been heard from traders as well, though most bids have remained at lower levels so far.

More specifically, export offers for boron-added SS400 HRC from most large Chinese mills have settled at $520-545/mt FOB, the same as last week. However, offers at lower level which had been heard from smaller mills at $510/mt FOB have been withdrawn this week, with most mills offering at a minimum of $520/mt FOB this week. “Most mills are still offering at $520-540/mt FOB levels for June shipment even though sentiment has improved”, a market insider told SteelOrbis.

Meanwhile, the tradable levels for ex-China SS400 have been assessed at $515-530/mt FOB, up by $5/mt over the past week. The lower end of the range represents the level seen in offers to Vietnam early this week at $525/mt CFR, versus $520/mt CFR last week, though most bids are still heard at $515/mt CFR, according to sources. Offers in Pakistan have been estimated at around $535/mt CFR, up by $5/mt week on week.

Meanwhile, most offers for ex-China SS400 from traders in the Middle East have been maintained at $550-555/mt CFR UAE, while offers in Turkey have been heard at $545-555/mt CFR, up by $5/mt week on week.

At the same time, average HRC prices in the Chinese domestic market are unchanged on week-on-week basis, though indicated a rebounding trend following the Tomb Sweeping Day amid the stimulus policies for the real estate market and the big rises in raw material prices. In particular, domestic HRC prices in China are at RMB 3,830-3,920/mt ($542-548/mt) ex-warehouse on April 9, with the average price level remaining stable compared to that recorded on April 2, but up by RMB 35/mt ($5/mt) since yesterday, according to SteelOrbis’ data. 

During the given week, HRC prices in the Chinese domestic market have generally moved sideways, though indicating various trends in different cities. In several cities, the housing provident fund policy has been adjusted, with the loan amounts being raised, which will exert a positive impact on real estate purchases and on demand for steel. Market sentiments have improved to a certain degree. Moreover, in some cities, the policy of “replacing the old apartments with new one” has been expanded, which will also bolster the real estate market and market sentiments. Import iron ore prices have seen big rises, providing solid support for HRC prices from the cost side. It is expected that HRC prices in the Chinese domestic market will see an upward trend in the coming week.

As of April 9, HRC futures at Shanghai Futures Exchange are standing at RMB 3,766/mt ($526/mt), increasing by RMB 78/mt ($11/mt) or 2.1 percent since April 2, while up 1.92 percent compared to the previous trading day, April 8. 

$1 = RMB 7.0956