Ex-China HRC prices stable from mills, but tradable level gains $5/mt

This week, most big Chinese mills have decided to roll over their export prices and, even though sentiments have worsened in the local market following the declines in futures prices, the tradable level has increased slightly over the past week given the absence of cheaper non-VAT offers from China in the market.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $540-560/mt FOB, the same as last week, while smaller producers have kept offering their materials at around $535-550/mt FOB. According to sources, this week no significant trading activity will be reported in the market given the Labor Day holiday in the country (May 1-5).

Meanwhile, following the news about inspections into non-VAT trading in China last week, this week many traders have remained out of the export market, while the tradable price level for SS400 HRC has settled at $530-545/mt FOB, versus $530-535/mt FOB last week. The lower end of the range corresponds to indicative offers for ex-China Q235/SS400 at $540-550/mt CFR in Vietnam, the same as last week, though no deals have been reported in this destination given the national holidays this week in Vietnam as well.

Ex-China offers for Q195/SS400 in Turkey have been reported at $580/mt CFR, up by $15/mt since the beginning of last week and compared to $570-575/mt CFR reported at the end of last week. Besides, offers for ex-China SS400 in the UAE have mainly been voiced at $575-585/mt CFR, up by $15-25/mt since the beginning of last week. Furthermore, according to sources, a deal for around 12,000 mt of ex-China HRC is reported to have been done to Oman at slightly above $570/mt CFR.

In the meantime, average HRC prices in the Chinese domestic market have edged down slightly since stock replenishments have not been as good as expected ahead of the Labor Day holiday. In particular, domestic HRC prices in China have settled at RMB 3,880-3,990/mt ($546.5-562/mt) ex-warehouse on April 30, with the average price level RMB 20/mt ($2.8/mt) lower compared to that recorded on April 23, according to SteelOrbis’ data.

Demand for HRC has been sluggish amid the prevailing bearish sentiments among market players, while HRC futures prices have fluctuated within a limited range, affecting market sentiments. Besides, transaction activities for HRC have not improved significantly in the last week ahead of the Labor Day holiday, which has exerted a negative impact on prices. However, the fourth round of price hikes has been observed for coke, which will bolster HRC prices from the cost side.

As of April 30, HRC futures at Shanghai Futures Exchange are standing at RMB 3,804/mt ($536/mt), increasing by RMB 7/mt ($1/mt) or 0.2 percent since April 23, while down 0.34 percent compared to the previous trading day, April 29.

$1 = RMB 7.1063