Ex-China HRC prices stable from mills, tradable prices fall amid futures declines

This week, most big Chinese mills have rolled over their export prices, while, according to sources, most of them have returned from the holiday but are still avoiding placing firm orders due to the shaky situation due to the imposition of new tariffs in the US, while in the local HRC market in China HRC prices have seen decreases compared to the previous week amid declining HRC futures prices. Meanwhile, traders have been more active, though with lower offers, as sentiments have worsened among market players this week. As a result, the tradable level has decreased by around $7.5/mt as compared to traders´ offers last week.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $470-480/mt FOB for mainly March shipment, the same as last week. According to sources, many Chinese producers are still refraining from giving offers due to worsening sentiments in the market amid the recent declines in HRC futures prices, which have affected price ideas from overseas customers.

“Rising trade tensions, sparked by Trump’s weekend announcement of a 25 percent tariff on all US steel and aluminum imports, weighed on HRC prices. However, potential declines were cushioned by uncertainty over the seasonal demand rebound and persistent stimulus expectations ahead of China’s Two Sessions, the country’s largest annual political gathering, anticipated in March,” a market insider told SteelOrbis.

In the meantime, this week signs of falling prices have emerged in the market as Chinese traders have started to cut their offers given the sharp falls in futures prices. Thus, the tradable level for ex-China SS400/Q235 HRC has settled at $458-465/mt FOB, against $463-475/mt FOB at the beginning of last week. The lower end of the range corresponds to offers for Asian buyers, while the higher end corresponds to offers to distant markets, including the Middle East and Turkey.

Offers for ex-China Q2345 HRC in Vietnam have been estimated at around $470/mt CFR, down by $5-10/mt week on week. However, several bookings for ex-China Q195 HRC have been reported at $468/mt CFR for March shipment, down by $5/mt week on week.

Furthermore, offers for ex-China Q195 HRC in Turkey have been voiced at $495-500/mt CFR from traders, against $505-510/mt CFR last week. Chinese SS400 HRC offers from traders in the UAE have been voiced at $490-495/mt CFR, down by $10/mt over the past week.

Meanwhile, domestic HRC prices in China have settled at RMB 3,470-3,550/mt ($484-495/mt) ex-warehouse on February 11, with the average price level RMB 10/mt ($1.4/mt) lower compared to that recorded on January 21, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have seen declines as inventories increased following the long Chinese New Year holiday. At the same time, steelmakers’ capacity utilization rates have increased, exerting a negative impact on HRC prices due to the increasing supplies. Demand for HRC from downstream users may need more time to materialize, which also weakens the support for prices. However, major Chinese steelmaker Baosteel has raised its HRC prices by RMB 100/mt ($14/mt) for delivery in March, which will positively affect the market.

As of February 11, HRC futures at Shanghai Futures Exchange are standing at RMB 3,387/mt ($472/mt), decreasing by RMB 81/mt ($11.3/mt) or 2.3 percent since January 21, while down 1.45 percent compared to the previous trading day, February 10.         

$1 = RMB 7.1716