Ex-China HRC prices only rise slightly despite improved sentiment in futures

Chinese HRC export prices from both mills and traders have remained relatively stable or have showed only a slight upward bias over the past week, despite the recovery in the HRC futures market. At the same time, while sentiment has improved slightly, actual transaction levels have shown limited movement as the market continues to digest recent gains. Persistent factors such as environmental inspections, ongoing mill maintenance and seasonally weak demand are keeping export spot prices largely in a holding pattern.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $460-485/mt FOB, with a midpoint at $472.5/mt FOB, for December shipment, up by $2.5/mt over the past week. Meanwhile, offers from smaller mills have been voiced mainly at $450-460/mt CFR, the same as last week.

At the same time, while offers from most Chinese traders have moved to $455-460/mt CFR, compared to $450-460/mt CFR last week, according to sources offers from non-VAT traders have been voiced at $445-450/mt FOB, compared to $440-445/mt FOB last week. “The Chinese market is digesting yesterday’s sharp increase and remains unchanged today. Overall conditions are similar, and, with ongoing environmental inspections and additional mill maintenance, supply and demand are unlikely to improve significantly during the winter season,” a market source said.

In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at $475/mt CFR, up by $5-7/mt week on week. Furthermore, following several deals for ex-China Q235 HRC at $470/mt CFR Pakistan, this week most offers have settled at $470-475/mt CFR. 

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have been voiced at $480-495/mt CFR UAE from traders, mainly the same last week. “One of the leading Chinese mills has increased its HRC base price by $5/mt, and several large orders for the Middle East are currently under discussion. Logistics remain challenging due to a reduced number of available vessels,” a market insider told SteelOrbis.

Besides, Chinese Q195 HRC offers to Turkey have been estimated at $485-490/mt CFR from Chinese suppliers with VAT, up by $5/mt week on week, while offers from non-VAT Chinese sellers have been estimated at around $480/mt CFR, up by $5/mt week on week. According to sources, there has been talk circulating in the market about two cargoes bought at $472-473/mt CFR, but market insiders have denied this information at the time of publication.

In the meantime, average HRC prices in the Chinese domestic market have indicated rises compared to the previous week amid increasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,330-3,430/mt ($469-483/mt) ex-warehouse on November 18, with the average price level RMB 23/mt ($3.2/mt) higher compared to that recorded on November 11, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have seen increases amid rising HRC futures prices and improved market sentiments. Meanwhile, coke prices have seen their fourth round of hikes, firmly bolstering HRC prices from the cost side. However, due to the traditional offseason and the colder weather, market players are cautious as regards the future prospects for the HRC market. It is thought that HRC prices in the Chinese domestic market will move sideways in the coming week.

As of November 18, HRC futures at Shanghai Futures Exchange are standing at RMB 3,286/mt ($463/mt), increasing by RMB 44/mt ($6.2/mt) or 1.4 percent since November 11, while rising by 0.21 percent compared to the previous trading day, November 17.

$1 = RMB 7.0856