Ex-China HRC prices rise further as mills and traders lift offers

Ex-China hot rolled coil (HRC) prices have increased further over the past week, with both mills and traders raising offer prices amid firmer sentiments in the domestic and export markets. The uptrend has been supported by improved local demand, a stronger HRC futures performance and the weakening of the US dollar against the Chinese yuan, which has reduced pressure on exporters. In addition, leading producer Baosteel has announced a RMB 100/mt ($14.6/mt) increase in its June base prices and other producers have followed, while market sources said major mills have shown little willingness to lower export offers, with leading HRC prices remaining above $520/mt FOB for various destinations.

More specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $520-540/mt FOB, with a midpoint at $530/mt FOB, up by $5/mt since the end of last week and up by $12.5/mt week on week. Besides, offers from smaller private mills have been voiced at around $518-525/mt FOB, versus $510/mt FOB reported last week.

At the same time, offers from Chinese traders have been estimated at $515-520/mt FOB, versus $505-515/mt FOB at the end of last week. According to sources, this week, ex-China 2,000 mm Q235 HRC offers in Vietnam have remained extremely rare, with indicative offers with VAT for July shipments voiced at $530/mt CFR, up by $5/mt week on week. Besides, a deal for ex-China Q195 HRC has been reported at $515/mt FOB in Pakistan, according to sources.

Offers for ex-Chinese Q195 HRC through traders to Turkey have been voiced at $570-572/mt CFR, up by at least $10/mt week on week. Furthermore, although most Chinese mills are still not issuing new export offers to Gulf buyers due to freight conditions and insurance coverage for vessels, offers from Chinese traders have appeared in the UAE market at around $585-595/mt CFR, up by $5/mt week on week, with the freight rate estimated at around $70/mt.

“The market is still firm. With the dollar weakening and sentiment improving ahead of Trump’s visit to China, mills see no room to reduce export offers further,” a source said.

“Leading mills are already above $520/mt FOB for HRC, while the local market is showing better demand and less pressure on producers. Sellers have very limited flexibility now,” another market insider told SteelOrbis.

Meanwhile, domestic HRC prices in China are at RMB 3,530-3,630/mt ($515-530/mt) ex-warehouse on May 13, with the average price level RMB 30/mt ($4.4/mt) higher compared to that recorded on May 6, according to SteelOrbis’ data. Following the Labor Day holiday, downstream users have concluded purchases for HRC, exerting a positive impact on prices. However, after the release of demand, market players mostly held a wait-and-see stance at a relatively high price level. Moreover, on May 12, coking coal futures prices saw a big decline of 4.58 percent, weakening the support for market sentiments. It is thought that HRC prices in the Chinese domestic market will fluctuate in a limited range with a negative bias in the coming week.

As of May 12, HRC futures at Shanghai Futures Exchange are standing at RMB 3,471/mt ($507/mt), decreasing by RMB 22/mt ($3.2/mt) or 0.6 percent since May 6, while decreasing by 0.57 percent compared to the previous trading day, May 11. 

 $1 = RMB 6.8426