Ex-China HRC prices stronger from mills amid futures recovery, tradable levels lag a bit behind

Following a recovery in futures prices this week together with improved domestic quotes, Chinese HRC mills have decided to increase their export offers. Meanwhile, although some traders have slightly increased their prices as well, in general, the tradable price level has remained unchanged, as many customers need time to evaluate future price trend and are not in a hurry to accept higher offers so far.  

More specifically, export offers for boron-added SS400 HRC from large Chinese mills are at $545-565/mt FOB, with a midpoint at $555/mt FOB, up by $12.5/mt week on week. “Most mills are actually offering at $545-550/mt FOB so far, with only several going up to $560-565/mt FOB,” a market insider told SteelOrbis.  

At the same time, the tradable level for Chinese SS400 HRC has remained relatively stable as compared to the beginning of last week, standing at $515-540/mt FOB, though up by around $15/mt on the higher end of range as compared to ex-China offers at the end of last week. In particular, the lower end of range corresponds to ex-China Q195/SS400 HRC offers in Vietnam at $525/mt CFR, same as last week. According to sources, several lots for 20,000 mt in total for ex-China HRC have been booked in Vietnam at $520/mt CFR and slightly below level, while this week the material has changed hands at $525/mt CFR for December shipment. Offers for SAE1006 HRC, however, have remained at $550-560/mt CFR Vietnam, however, talks about position offers at $545/mt CFR have been circulating in the market.  

Meanwhile, Chinese SS400 HRC have been offered at $570-575/mt CFR Turkey, versus $560-570/mt CFR last week. Most offers for ex-China SS400 in the Middle East have been voiced at $570/mt CFR, as compared to $550-560/mt CFR at the end of last week, though $550-560/mt CFR have been still heard by some traders, according to sources. Furthermore, several deals for ex-China SAE1006 and structural s275 have been heard at $575-595/mt CFR UAE at the end of last week.  

At the same time, average HRC prices in the Chinese domestic market have moved on a uptrend amid the increasing supply and inventory level. Domestic HRC prices in China are at RMB 3,890-3,970/mt ($542-553/mt) ex-warehouse on October 17, with the average price level RMB 17/mt ($2.4/mt) higher compared to that recorded on October 10, according to SteelOrbis’ data.  

During the given week, the supply and demand of HRC has been at weakly balanced situation, though the HRC prices bore the downward pressure, which still gained support from the relatively high raw material prices and rising HRC futures prices. The demand in the traditional peak season seemed not good this year, while HRC producers have been unwilling to cut their production outputs at current stage, which will affect its prices. Market players mostly held cautious sentiments towards the prospect for the future HRC market. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.  

As of October 17, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,766/mt ($525/mt), increasing by RMB 51/mt ($7.1/mt) or up by 1.4 percent since October 10.

$1 = RMB 7.1796