Ex-China HRC prices relatively stable, some downward bias amid futures price decline

This week, most Chinese HRC mills have continued to maintain their offers at unchanged levels, though several producers as well as Chinese traders have decided to go a bit lower as the downward bias in HRC futures prices have been affecting the market mood. At the same time, several deals have been reported mainly with Asian suppliers with additional discounts.

Specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $470-485/mt FOB, with a midpoint at $477.5/mt FOB, down by $2.5/mt week on week, mainly for April shipment. Meanwhile, offers from smaller mills have been voiced at $465-470/mt FOB, mainly the same as last week.

The tradable levels for ex-China SS400/Q235 HRC have been estimated at $462-470/mt FOB, compared to $466-475/mt FOB last week. The lower end of the range corresponds to ex-China Q235 HRC offers in Vietnam at $475-479/mt CFR, down by $3/mt week on week. Besides, according to sources, a deal for around 30,000 mt of ex-China SAE1006 HRC has been signed at $498/mt CFR. Furthermore, another deal for around 20,000 mt of ex-China coils has been done to Malaysia at $491/mt CFR. 

Meanwhile, offers for ex-China SS400 HRC in the Middle East have remained at $495-515/mt CFR, depending on the supplier, the same as last week. Offers in Turkey for ex-China Q195 HRC have settled at $495-505/mt CFR, the same as last week.

At the same time, HRC prices in the Chinese domestic market have continued to fluctuate indicating slight rises compared to the previous week but have decreased slightly as compared to yesterday, March 3, following the slight falls in HRC futures prices. Specifically, domestic HRC prices in China have settled at RMB 3,450-3,520/mt ($481-491/mt) ex-warehouse on March 4, with the average price level RMB 10/mt ($1.4/mt) higher compared to February 25, but down RMB 25/mt ($3.4/mt) since yesterday, according to SteelOrbis’ data.

“Steel lacks significant positive momentum in early spring, and, if Tangshan's production cuts do not trigger a chain reaction, narrow fluctuations may persist until a policy intervention occurs,” a market insider told SteelOrbis.

From March 4 to March 12, independent hot rolling enterprises in Tangshan, the major steelmaking hub in northern China, will halt production, as required by Hebei Province’s Tangshan Bureau of Ecology and Environment, which has provided some support for the HRC market due to reduced market supply. The inventories continued to increase, but at a significantly slower rate. At the same time, due to the Two Sessions, sentiments have improved as market players expect more stimulus policies.

As of March 4, HRC futures at Shanghai Futures Exchange are standing at RMB 3,398/mt ($474/mt), increasing by RMB 22/mt ($3.1/mt) or 0.65 percent since February 25, while down 0.79 percent compared to the previous trading day, March 3.   

$1 = RMB 7.1739