Ex-China HRC prices see limited fluctuations toward year-end, competition tightens due to disappearance of non-VAT offers

The ex-China hot rolled coil (HRC) market has continued to fluctuate within a narrow range, with offers from Chinese mills remaining largely stable or recording only slight increases, following a modest uptick in domestic HRC prices. At the same time, HRC futures in China have continued to show mixed movements, fluctuating up and down without a clear trend. Meanwhile, the disappearance of non-VAT offers in major export destinations has tightened competition with other suppliers, particularly Indian producers in Vietnam, as Chinese offers have become less competitive.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $470-485/mt FOB compared to $465-490/mt FOB last week, but with a midpoint at $477.5/mt FOB, the same as last week. Offers from smaller private mills have been voiced mainly at $465-475/mt FOB, the same as last week. However, according to sources, their business activity has been paused, as most of these mills had previously been selling material without VAT, and all non-VAT sales have currently stopped due to export licensing requirements.

At the same time, tradable prices for Chinese SS400 HRC have settled at $460-470/mt FOB, versus $455-465/mt FOB last week. In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at around $490-495/mt CFR, for February shipment, compared to $480-483/mt CFR at the end of last week. “The current Q235 HRC ex-China prices are not going to work in Vietnam, given that offers and deal prices for SAE1006 HRC from other foreign suppliers are at slower levels,” a Vietnamese trader told SteelOrbis. For instance, ex-India deal prices in Vietnam have been reported at $480/mt CFR and slightly below level this week.

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have been voiced at around $490-505/mt CFR UAE, depending on the supplier, up by $5/mt on the lower end of range week on week. Besides, Chinese Q195 HRC offers to Turkey have been estimated at $505/mt CFR for February shipment, compared to $500-502/mt CFR last week, while offers for SAE1006 and Q235 HRC have been voiced at $510/mt CFR and $525/mt CFR, respectively.

At the same time, average HRC prices in the Chinese domestic market have seen only slight rises compared to the previous week. In particular, domestic HRC prices in China have settled at RMB 3,310-3,420/mt ($471-486.5/mt) ex-warehouse on December 30, with the average price level RMB 10/mt ($2.4/mt) higher compared to that recorded on December 23, according to SteelOrbis’ data. 

HRC futures prices have seen slight rises, bolstering the prices in spot market to a certain degree. More HRC producers implemented maintenances, reducing the supply to the spot market, bolstering its prices. Meanwhile, market players expected for stock replenishments for winter usage, which will provide certain support to HRC prices in the future. However, demand for HRC from downstream users has been slack, weakening the prices to a certain degree. 

As of December 30, HRC futures at Shanghai Futures Exchange are standing at RMB 3,282/mt ($467/mt), increasing by RMB 1/mt ($0.14/mt) since December 23, while decreasing by 0.33 percent compared to the previous trading day, December 29. 

$1 = RMB 7.0348