Ex-China HRC prices rise after holiday, gap between traders and mills widens

Chinese HRC suppliers have finally returned to the market from the long Chinese New Year holiday this week. As anticipated, Chinese mills have increased their HRC export offers given the better mood in the domestic and futures markets along with bullish sentiments among other HRC suppliers globally. However, smaller mills and traders have been more cautious as regards big price hikes, increasing their offers only slightly, emphasizing the still slower-than-expected demand recovery, especially in the Asian region.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $650-670/mt FOB, mainly for March shipment, with the midpoint at $660/mt FOB, up by $15/mt compared to January 17. “Some producers like Shagang Steel, Benxi and Rizhao have increased their offers to as high as $670/mt FOB, up by $15-20/mt,” a market insider said.

Meanwhile, smaller mills and traders have decided to be more careful, increasing their offers by only $5/mt over the past two weeks to $625-640/mt FOB. According to market sources, a deal for ex-Anfeng SS400 HRC is reported to have been signed at $635/mt CFR Vietnam this week. This means the tradable price level have increased by $5/mt over the past two weeks. At the same time, ex-China SS400 HRC offers to the Middle East, the UAE in particular, have been heard at $690/mt CFR, versus $680-690/mt CFR two weeks ago.

In the SAE1006 HRC segment, more hikes have been reported as compared to the SS400 HRC segment. In particular, ex-China SAE1006 HRC offers to Vietnam from mills have settled at $690/mt CFR, while offers from traders have increased by $20/mt over the past two weeks to $670-680/mt CFR. Besides, offers to the Middle East have been voiced at $700-710/mt CFR, with a deal reported at $700/mt CFR UAE this week.

In the meantime, most traders and downstream users have been back in the domestic market in China, while transaction activities in the local HRC market have not returned to normal levels. The prevailing bullish sentiments among market players following the long holiday have bolstered offer prices. Meanwhile, the firm production costs of HRC have provided support for its prices. It is expected that HRC prices in the Chinese domestic market will likely edge up in the coming week.

Domestic HRC prices in China are at RMB 4,200-4,280/mt ($621-633/mt) ex-warehouse on January 31, with the average price level RMB 85/mt ($13/mt) higher than that recorded on January 17, according to SteelOrbis’ data.

As of January 31, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,154/mt ($614.5/mt), increasing by RMB 6/mt ($0.9/mt) or 0.14 percent since January 17.

$1 = RMB 6.7604