Ex-China HRC prices retreat again due to slump in local prices

Although most Chinese suppliers have been trying to maintain their offers, several mills have corrected their offers down slightly this week as business activity remained slow. At the same time, HRC futures prices in China have indicated a small rise on Tuesday, June 18, though local prices have continued their downward movement so far amid slack demand from downstream users.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $525-535/mt FOB, with a midpoint at $530/mt FOB, down by $5/mt week on week. “Big mills have been struggling to maintain their offers, but some have been less positive and declined their offer slightly to attract buyers. Offers from Shagang are at $525/mt FOB, from Yagang at $535/mt FOB, while from Benxi we heard at $525/mt FOB as well,” a market insider told SteelOrbis.

Meanwhile, offers from smaller mills have been voiced at $520-525/mt FOB, mainly the same as last week, though offers from traders, especially without VAT have been voiced in Vietnam at around $510-515/mt FOB, down by $5/mt week on week. Thus the tradable prices for SS400 HRC have settled at $510-520/mt FOB, against $515-525/mt FOB last week. According to sources, while offers for ex-China SS400/Q195 HRC in Vietnam have been heard at $530/mt CFR, down by $5/mt week on week, a deal for 10,000 mt of ex-China Q195 HRC through non-VAT traders has been signed at $522/mt CFR this week. Besides, another deal for 20,000 mt of ex-China Q195 strips has been reported at $515/mt CFR. Furthermore, while most offers for ex-China SAE1006 HRC from mills have been voiced at $550-555/mt CFR, against $555/mt CFR last week, a few offers from Chinese traders have been heard at as low as $545/mt CFR this week.

Besides, offers from Chinese suppliers in the Middle East have been estimated at $560-570/mt CFR, against $570-575/mt CFR last week. According to sources, several deals have been signed at $525/mt FOB in the UAE, which translates to around $565/mt CFR. 

Meanwhile, during the given week, demand for HRC continued to weaken, exerting a negative impact on its prices. Sellers had to reduce their prices, aiming to stimulate transaction activities. HRC futures prices fluctuated within a limited range, which may bolster spot prices to a certain degree. However, coke prices moved down, likely weakening the support to HRC prices from the cost side. It is thought that HRC prices in the Chinese domestic market will move sideways in the coming week.

Domestic HRC prices in China are at RMB 3,810-3,930/mt ($536-553/mt) ex-warehouse on June 18, with the average price level of RMB 7/mt ($1/mt) lower compared to that recorded on June 11, according to SteelOrbis’ data.

As of June 18, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,791/mt ($533/mt), increasing by RMB 26/mt ($3.1/mt) or 0.7 percent since June 11, while up 0.24 percent compared to the previous trading day, June 17.

$1 = RMB 7.1148