Ex-China HRC prices stable, exporters face muted trade and rising Asian competition

In the Chinese hot rolled coil (HRC) export market, prices from both mills and traders have remained relatively stable, while trade activity has continued to hover near zero following the New Year holidays. Meanwhile, Chinese suppliers are facing tighter competition from other Asian exporters across all major destinations.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $470-485/mt FOB, with a midpoint at $477.5/mt FOB, the same as last week. Offers from smaller private mills have been voiced mainly at $465-470/mt FOB, the same as last week, while, 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, tradable prices for Chinese SS400 HRC have settled at $460-470/mt FOB, the same as last week. In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at around $485/mt CFR, for February shipment. Besides, Chinese offers for SS400 HRC to other destinations like the Middle East have remained at around $490-505/mt CFR UAE, depending on the supplier. In addition, Chinese Q195 HRC offers to Turkey have been estimated at $500-505/mt CFR for February shipment.

“As all non-VAT sales have currently stopped due to export licensing requirements, Chinese suppliers have faced tighter competition globally, as suppliers from Japan, India, South Korea and Indonesia have been offering and manged to sell their coils at competitive prices in Asia, the Middle East and even South America,” a Chinese trader told SteelOrbis.

In the meantime, average HRC prices in the Chinese domestic market have moved down compared to the previous week amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,280-3,370/mt ($467-480/mt) ex-warehouse on January 6, with the average price level RMB 36/mt ($5.1/mt) lower compared to that recorded on December 30, according to SteelOrbis’ data.

HRC futures prices have indicated slight decreases over the past week, weakening the support for prices in the spot market. Cautious sentiments have prevailed among market players, while most traders have chosen to consume their inventories first, signalling their unwillingness to build up stocks of HRC, and exerting a negative impact on the market. However, China’s stock market has indicated continuous rises after the New Year holiday, which may bolster market sentiments.

As of January 6, HRC futures at Shanghai Futures Exchange are standing at RMB 3,263/mt ($467/mt), decreasing by RMB 19/mt ($0.14/mt) or 0.6 percent since December 30, while increasing by 0.18 percent compared to the previous trading day, January 5.

$1 = RMB 7.0173