Ex-China HRC prices remain relatively stable despite higher futures

Chinese HRC mills, who increased their offer prices last week, have this week mostly maintained their offers at unchanged levels. Meanwhile, the continuous recovery of HRC local and futures prices have kept providing support for the market mood, and, although some revival in trade activity has been seen in some destinations like South America, the Middle East, and some Asian countries, demand is still not sufficient to support a sharp rise in prices, thus just like the mills, most traders have maintained their offers unchanged so far.

Specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $550-575/mt FOB for January shipment, with a midpoint at $562.5/mt FOB, the same as last week. “We don’t expect $575/mt FOB to be workable, actually it is totally out of market and offered by Benxi Steel, but most big mills are aiming higher than $560/mt FOB anyway,” a market insider said.

Meanwhile, the tradable level for SS400 HRC has been voiced at $535-545/mt FOB, versus $535-550/mt FOB at the end of last week, but up by $5/mt on the lower end of the range week on week. According to sources, China is reported to have sold a few lots of SS400 HRC in Oman at around $585/mt CFR Sohar in the past few days. Besides, several deals for ex-China Q195 HRC have been reported at $540/mt CFR Vietnam, the same as last week.

As for the SAE1006 HRC segment, according to Chinese sources, at least 100,000 mt of the materials have been sold globally at $545-553/mt FOB since last week, while most offers have been voiced at $555/mt FOB and above this week. In particular, offers for ex-China SAE1006 HRC in the UAE and Turkey have been voiced at $590-595/mt CFR this week. Besides, offers in Vietnam have been estimated at $570-575/mt CFR, the same as last week, though buyers are still expecting at least $5-10/mt discounts.

At the same time, average HRC prices in the Chinese domestic market have continued their uptrend amid the increasing trend of HRC futures prices. Particularly, domestic HRC prices in China are at RMB 4,040-4,250/mt ($563-592/mt) ex-warehouse on November 14, with the average price level RMB 47/mt ($6.5/mt) higher compared to that recorded on November 7, according to SteelOrbis’ data.

During the given week, major Chinese steelmaker Baosteel raised its local base prices for HRC for delivery in December by RMB 100/mt ($14/mt), bolstering market sentiments. At the same time, HRC production output declined in the given week, exerting a positive impact on prices from the supply side. However, inventory of HRC has been at relatively high levels, which will negatively affect prices in the near future. As the weather gets colder and colder, demand may slacken, which will weaken the support for HRC prices. It is expected that HRC prices in the Chinese domestic market may fluctuate within a limited range in the coming week.

As of November 14, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,951/mt ($550/mt), increasing by RMB 62/mt ($8.6/mt) or up by 1.6 percent since November 7, though declining by 0.5 percent compared to the previous trading day. 

$1 = RMB 7.1768