Reversing a short-lived earlier uptrend, HRC export prices from China have declined over the past week amid slack demand and the declining trend of HRC futures prices. Some deals have already been heard at lower levels. Besides, market insiders believe that slow buying activity in the major trade destinations due to slack demand may further exert a negative impact on ex-China HRC prices.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $730-750/mt FOB for August shipment, with a midpoint at $740/mt FOB, posting a $32.5/mt decrease on average compared to last week. At the same time, one of the Chinese mills has decreased its offer to $705/mt FOB, down by $25/mt week on week. Besides, according to market insiders, some mills are still offering at around $760/mt FOB, but this level is considered not to be workable anymore.
Meanwhile, the tradable level for ex-China SS400 HRC has settled at $700-740/mt FOB, down by $30-35/mt week on week. In particular, this week several deals for ex-China SS400 HRC have been reported at $730-738/mt CFR Vietnam, down by $22-28/mt over the past week. Meanwhile, the lowest offers for ex-China SAE1006 HRC have been voiced in Vietnam at $755/mt CFR for August shipment, compared to $760/mt CFR last week. At the same time, ex-China SS400 HRC offers to Pakistan have been heard at $770-775/mt CFR, while offers for SAE1006 HRC at $785/mt CFR, down by $5-10/mt week on week. However, although ex-China offers are the most attractive among all foreign suppliers, no deals for Chinese materials have been reported in Pakistan as “allocations from China are tight considering that most Chinese traders and mills are not offering to Pakistan because of strict conditions regarding the opening of LCs, in particular a 100 percent cash margin is required to open LCs,” a Pakistani trader told SteelOrbis.
“The rainy season in southern and eastern China has exerted a negative impact on demand for HRC, while the declines in HRC futures prices have also negatively affected the HRC market,” an international trader told SteelOrbis.
During the given week, HRC prices in the Chinese domestic market have moved down amid increasing inventory levels and slacker-than-expected demand. At the same time, steelmakers’ supplies of HRC are expected to be at relatively high levels in June, which will exert a negative impact on the demand and supply situation in the market. It is thought that HRC prices in the Chinese domestic market will likely move sideways in the coming week.
Domestic HRC prices in China are at RMB 4,730-4,870/mt ($701-722/mt) ex-warehouse on June 14, with the average price level RMB 107/mt ($16/mt) lower as compared to June 7, according to SteelOrbis’ data.
As of June 14, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,697/mt ($696/mt), decreasing by RMB 113/mt ($16.7/mt) or 2.35 percent since June 7.
$1 = RMB 6.7482
