Ex-China HRC prices rise further, customers not in hurry to accept

This week, Chinese HRC suppliers have been making new attempts to increase their offers given further improvement seen in the domestic and futures markets in China, coupled with the solid support from raw material prices. However, the general level of business activity especially for HRC exports has been rather moderate, while the higher prices targeted for ex-China HRC have not been achieved, with the majority of bids in most trade destinations remaining at least $10/mt lower than the best offers of any Chinese seller. 

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $580-590/mt FOB, with a midpoint at $585/mt FOB, up by $7.5/mt week on week. “Some offers have been heard at even $595/mt FOB, but enquiries from buyers are rare these days and nobody is ready to accept higher offers so far,” a market insider told SteelOrbis. 

Meanwhile, despite buyers’ resistance the tradable level for ex-China SS400 has moved up as well, reaching $565-575/mt FOB, depending on the destination, against $550-560/mt FOB last week. The lower end of the range corresponds to ex-China offers in Vietnam at $575-580/mt CFR, up by around $15/mt over the past week, while offers for Q195 HRC have reached $570/mt CFR, with no deal reported so far. Furthermore, offers for ex-China SS400 HRC from traders in the Middle East have been voiced at $600-605/mt CFR, while mills’ offers have been estimated at around $620-630/mt CFR. At the same time, according to sources, ex-China SS400/Q195 HRC offers from non-VAT traders have been heard in Turkey at $606-610/mt CFR, mainly the same as last week, while other suppliers’ offers are at $620/mt CFR and above. 

In the SAE1006 HRC segment, Chinese traders, who have been trying to sell from positions, have been offering their materials at $580-590/mt FOB, up by around $10/mt week on week, while most mills have been aiming for $605-610/mt FOB and above. In particular, ex-China SA1006 HRC offers from traders in short positions have been voiced in Vietnam at $590-600/mt CFR, up by $10-20/mt CFR week on week, while Chinese mills’ offers have settled at as high as $620/mt CFR. 

In the meantime, average HRC prices in the Chinese domestic market have indicated increases amid solid support from raw materials and rising HRC futures prices, reaching RMB 4,130-4,280/mt ($580-601/mt) ex-warehouse on December 12, with the average price level RMB 113/mt ($16/mt) higher compared to that recorded on December 5, according to SteelOrbis’ data.  

During the given week, major Chinese steelmaker Baosteel announced an increase in its local base prices for HRC by RMB 200/mt ($28/mt) for delivery in January next year, which will bolster HRC prices in the spot market in the near future. At the same time, prices of raw materials, including iron ore and coke, have been at relatively high levels, providing solid support for HRC prices from the cost side as well. However, the weather in China is a lot colder, which will exert a negative impact on market sentiments and will likely weaken HRC prices. At the same time, market players mostly hold cautious sentiments as regards the future prospects for the HRC market because buyers have not been very active in building up stocks for the winter season. 

As of December 12, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,155/mt ($584/mt), increasing by RMB 184/mt ($26/mt) or up by 4.6 percent since December 5, though increasing by 0.41 percent compared to the previous trading day.

$1 = RMB 7.1174