Ex-China HRC prices show limited movement amid subdued demand

Ex-China HRC export prices have remained relatively stable over the past week, showing only minor fluctuations amid limited trading activity. Market participants widely note that the Chinese domestic market has stalled again in a cooler environment, with a lack of fresh drivers to support further price increases. At the same time, although mills are benefiting from improved margins and slightly higher output, downstream demand remains subdued, and inventories are gradually edging up.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $475-480/mt FOB, compared to $470-485/mt FOB last week, though with a midpoint at $477.5/mt FOB, the same as last week. Offers from smaller private mills have been voiced mainly at $470-475/mt FOB, versus $465-470/mt FOB. However, according to sources, their business activity is still paused as most of these mills had previously been selling material without VAT.

At the same time, while offers from Chinese traders have been voiced at $460-470/mt FOB, the same as last week, deal prices have been voiced mainly at $460-465/mt FOB levels, according to sources. In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at around $485/mt CFR, for February shipment, the same as last week. 

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have settled at around $500-505/mt CFR UAE, depending on the supplier, up by $10/mt on the lower end of the range, though a number of sources have still been reporting offers at slightly lower levels of around $495/mt CFR.

In addition, Chinese Q195 HRC offers to Turkey have been estimated at $503-505/mt CFR for February shipment, up by $3/mt on the lower end of the range. Offers for ex-China SAE1006 HRC have been reported at $510/mt CFR, while offers for Q235 for pipe makers have been voiced at $530/mt CFR.

“The export market is stable. Leading mills, mainly through private channels, are maintaining similar base prices to test the market, with bids following only slowly. Small orders have been concluded, but mills have limited room for further price adjustments,” a Chinese trader told SteelOrbis.

In the meantime, domestic HRC prices in China have settled at RMB 3,310-3,420/mt ($472-488/mt) ex-warehouse on January 13, with the average price level RMB 43/mt ($6.1/mt) higher compared to that recorded on January 6, according to SteelOrbis’ data. 

HRC futures prices have shown a very limited increase over the past week, though there has been an increasing trend in commodity futures prices, in coking coal and coke futures prices, providing solid support for prices in the spot market. Liaoning Province-based Chinese steelmakers Anshan Iron and Steel, Benxi Iron and Steel (Bengang) and Ansteel Group Lingyuan Iron and Steel Co., Ltd. (Lingyuan Steel) have decided to keep their local base prices stable for hot rolled coil (HRC) for delivery in February, bolstering HRC prices to a certain degree.

Demand for HRC from downstream users has been slack during the traditional cold winter offseason, exerting a negative impact on market sentiments. Market players mostly hold a cautiously optimistic attitude as regards the future prospects for the HRC market.

As of January 13, HRC futures at Shanghai Futures Exchange are standing at RMB 3,303/mt ($467/mt), increasing by RMB 40/mt ($0.14/mt) or 0.6 percent since December 30, while increasing by 0.18 percent compared to the previous trading day, January 12. 

$1 = RMB 7.0103