Ex-China HRC offer prices have moved sideways in the past week, following the declines in the previous week, as, though demand has remained weak, the expected strong cuts in production in Hebei ahead of the Winter Olympics in January 2022, and the possible introduction of export duty for coils in China have been preventing any visible price changes and has limited trading.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $950-1,020/mt FOB for October shipment, with a midpoint at $985/mt FOB, moving sideways on average compared to last week. “Market players are worried about the possible export tax on HRC [according to the fresh rumors the decision may come by the end of August], while the declining iron ore prices have weakened the support for HRC export prices and negatively affected sentiments,” an international trader told SteelOrbis.
The tradable price level for SS400 coils has remained at $920-930/mt FOB lately, but most bids are hardly above $910/mt FOB, sources have said. Even if some traders go short and offer lower prices, customers are unlikely to be interested in purchases from China at the moment as they will need to bear all risks of the possible export duty, which are expected to be from 10 percent to 25 percent, according to different sources. Those customers who are in need of products will likely choose purchases from alternative sources like India, Taiwan, and Vietnam.
The workable price level from small Chinese mills and traders for SAE1006 HRC has been at $930-960/mt FOB, without any deals recently. The tradable level in Vietnam fell to below $920/mt CFR last week and some offers from Russia are still heard at $910/mt CFR, sources have said.
During the given week, domestic HRC prices have risen slightly in China amid increasing HRC futures prices. However, demand has remained slack in the traditional offseason, resulting in low-to-medium transaction activities. At the same time, the fresh news about stronger production cuts in Hebei ahead of the Winter Olympic Games in January 2022 has brought support for HRC prices.
Domestic HRC prices in China are at RMB 5,700-5,770/mt ($879-890/mt) ex-warehouse on August 10, with the average price level RMB 100/mt ($15.4/mt) higher as compared to August 3, according to SteelOrbis’ data. Compared with the price level on Monday, August 9, average local quotations are RMB 35/mt ($5.4/mt) higher.
As of August 10, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,856/mt ($903/mt), increasing by RMB 248/mt ($38.2/mt) or 4.4 percent since August 3.
$1 = RMB 6.4842
