Ex-China HRC sales livelier after prices roll back, competition increases

There have been more active negotiations and new sales heard for ex-China HRC after major sellers have rolled back the previous small increase. Also, increased competition with ASEAN exporters has resulted in additional discounts from China, though the domestic market is still rather stable.

Major large Chinese mills have been offering at $500/mt FOB, down from $502-505/mt FOB late last week, but most market sources agree that additional discounts are possible, and this level is assessed as the official offer price level.

The Chinese tradable SS400 HRC price (from small mills and traders) has lost $7/mt (the same amount as the increase announced in the middle of last week), coming to $485-487/mt FOB. “Anfeng corrected down to $487/mt FOB again and we see deals at near $485/mt FOB for South America and Africa,” a Chinese source said. More specifically, one contract for 20,000 mt of Chinese coils is rumored to have been done to Egypt at $545-547/mt CFR, according to market sources, which translates to slightly below $490/mt FOB, and it is in line with the market price level.

No new contracts have been done from China to Turkey after the previous sales at $530-535/mt CFR, as SteelOrbis reported last week, and it is expected that demand may be reduced as customers also purchased 100,000 mt of ex-Vietnam HRC at $525-530/mt CFR. By now, offers from Vietnam have rebounded to $540-545/mt CFR, but importers have already filled their stocks.

As for Southeast Asia’s import market, Chinese HRC exporters have been facing pressure in this outlet as well. The tradable level for ex-China SS400 HRC in Pakistan has been assessed at $510/mt CFR in today’s market conditions. “We see this as a rumor now. Offers are at $515-520/mt CFR,” a local source said. At the same time, in Vietnam, activity is still focused on ex-Indonesia HRC, with another deal heard at $520/mt CFR North Vietnam, which is equivalent to $515/mt CFR or even below for southern ports. “We heard customers are looking at below $510/mt CFR, but I do think Indian or Indonesian mills could accept such low prices at this moment,” a Singapore-based source said.

In the local Chinese HRC market, demand from downstream users has continued to be slack, but prices generally been stable. Major Chinese steelmaker Baosteel raised its HRC prices by RMB 50/mt ($7.4/mt) for delivery in August, bolstering market sentiments to a certain degree. However, transaction activities have been at relatively low levels, negatively affecting HRC prices. It is thought that HRC prices in the Chinese domestic market will fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 3,340-3,460/mt ($492-510/mt) ex-warehouse on July 20, with the average price level RMB 7/mt ($1/mt) higher compared to that recorded on July 14, according to SteelOrbis’ data. 

As of July 21, HRC futures at Shanghai Futures Exchange are standing at RMB 3,297/mt ($4826mt), decreasing by RMB 5/mt ($0.7/mt) or 0.15 percent since July 14, while down 0.27 percent compared to the previous trading day, July 20. 

$1 = RMB 6.7917