Ex-China HRC prices have posted a slight increase this week, after months of declines, and some deals have already been heard at higher levels. This has happened amid the recovery of local spot and futures prices on the back of the easing of the pandemic situation in Shanghai and the improved market outlook following the recent announcement of stimulus measures.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $750-770/mt FOB for August shipment, with a midpoint at $760/mt FOB, posting a $7.5/mt increase on average compared to last week. “Market players have been more optimistic towards the prospects for the future market as Shanghai has announced the lifting of its lockdown as of June 1, which will boost the demand for HRC amid the potential resumption of construction works and production,” an international trader told SteelOrbis.
Meanwhile, Chinese traders, who have been decreasing their HRC prices since April, have followed the mills’ strategy, increasing their offers to $730-760/mt FOB, up by $10/mt week on week. In particular, this week, ex-China SS400 HRC offers have settled at $745-750/mt CFR Vietnam, up by $15-20/mt over the past week. Meanwhile ex-China SAE1006 HRC have been offered in Vietnam at $770-775/mt CFR for August shipment, compared to $750-760/mt CFR last week. At the same time, while Vietnamese buyers are refraining from new purchases, buyers in Pakistan have accepted higher ex-China offers, signing several deals for SS400 HRC at $780/mt CFR, up by $10/mt week on week.
Demand in the higher-priced destinations has continued to be weak this week. Ex-China SAE1006 HRC offers to the EU have been heard at around $820-850/mt CFR excluding duty, while HRC offers to Turkey have been voiced at $840/mt CFR. Meanwhile, the latest offers to South America have been heard at $860-870/mt CFR Pacific coast, while offers to Brazil have settled at around $900/mt CFR level.
During the given week, HRC prices in the Chinese domestic market have moved up as China has issued several policies to boost economic development, especially a series of policies to stimulate the real estate market which has remained slack for a long time. At the same time, HRC output has decreased week on week, providing certain support for prices. Shanghai will resume production and normal working conditions as of June 1, positively affecting market sentiments. 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 4,850-4,950/mt ($728-743/mt) ex-warehouse on May 31, with the average price level RMB 90/mt ($13.5/mt) higher as compared to May 24, according to SteelOrbis’ data.
As of May 31, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,789/mt ($719/mt), increasing by RMB 180/mt ($27/mt) or 3.9 percent since May 24.
$1 = RMB 6.6607
