China-based hot rolled coil (HRC) suppliers have slightly decreased their offer prices, aiming to secure orders considering the weaker demand in higher-priced destinations. Thus, several deals for ex-China HRC have been reported in Asia. Meanwhile, HRC prices in the Chinese domestic market have seen a rebound even despite the losses in the futures market
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $860-900/mt FOB for June shipment, with a midpoint at $880/mt FOB, with the average price $5/mt lower compared to last week. The low offer prices of ex-China HRC came from Hebei Province-based Chinese steelmaker Chengde Iron and Steel, which have been heard at 860/mt FOB, though prices from Hebei Province-based Chinese steelmaker Yanshan Iron and Steel have been at $900/mt FOB.
At the same time, the tradable price level for SS400 coils, including the level from traders, offering in short positions for mainly June shipment, has fallen to $825-880/mt FOB, depending on destination, down by $10/mt over the past week, though most mills are trying not to go below $840-900/mt FOB. In particular, this week, several contracts for SS400 HRC to Vietnam have been done at $855-860/mt CFR in positions through traders, while another contract for 100,000 mt in total of SS400 and SAE1006 grade coils from a big Chinese mill has been reported at $870/mt CFR for SS400 and at $905/mt CFR for SAE1006 HRC, according to market sources. Besides, several deals for ex-China SS400 HRC were reportedly transacted to Pakistan at $875-885/mt CFR at the end of last week.
Meanwhile, demand in higher-priced destinations has slowed down, and so Chinese HRC suppliers have decided to decrease their prices to attract buyers. In particular, ex-China offers for SAE1006 HRC have dropped to $960-980/mt CFR UAE, compared to $960-1,020/mt CFR two weeks ago. Besides, after a deal for 10,000 mt of ex-China HRC was signed with Omani customers at $1,000/mt CFR last week, new offers have decreased to around $970/mt CFR. Furthermore, Chinese HRC offers for Turkish buyers have been heard at $975/mt CFR, compared to $1,030/mt CFR last week.
During the given week, HRC prices in the Chinese domestic market have seen an overall rising trend amid the improved demand in northeastern and northern China. However, in eastern China, due to the lockdown in Shanghai and strict control measures in the surrounding regions, demand has remained slack. The negative impact of the Covid-19 pandemic may ease soon, which will positively affect the HRC market. It is thought that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week. “Talking about good factors, the favorable macro policies continue to be released, the financial data exceed expectations, and on April 15 China’s central bank announced its decision to decrease the deposit reserve ratio to provide support to those small and medium sized enterprises affected by the recent worsening Covid-19 situation by reducing their financing costs and stabilizing employment,” a market insider stated.
Domestic HRC prices in China are at RMB 5,170-5,270/mt ($811-827/mt) ex-warehouse on April 19, with the average price level RMB 47/mt ($7.4/mt) higher as compared to April 12, according to SteelOrbis’ data.
As of April 19, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,164/mt ($810/mt), decreasing by RMB 16/mt ($2.5/mt) or 0.3 percent since April 12.
The lockdown in Shanghai has continued, while the surrounding areas have also been affected, resulting in more lockdowns in Zhejiang and Jiangsu provinces, which have exerted a negative impact on the demand for HRC. However, it seems that the Covid-19 cases have indicated some declines in Shanghai, bolstering market players’ sentiments to some extent. “The main negative factor is that the current domestic epidemic situation is still very severe, which has a great impact on downstream demand, and so the steel trading volume has decreased continuously,” a market insider told SteelOrbis.
$1 = RMB 6.376
