Ex-China HRC suppliers under pressure as futures fall, export uncertainty mounts

This week, most Chinese HRC mills have been forced to reduce export prices once again as sentiments have been more negative in the local market with domestic HRC prices decreasing as HRC futures prices have declined further. Besides, amid speculation that the Chinese government may impose a sweeping ban on non-VAT steel exports beginning from May 1, exporters have shifted to a cautious, wait-and-see stance, pausing fresh offers until there is greater clarity.

Specifically, offers for ex-China boron-added SS400 HRC from large mills have settled at $460-470/mt FOB, with a midpoint at $465/mt FOB, down by $7.5/mt week on week. Besides, according to a number of sources, some offers from mills have already been voiced at lower levels, or around $455/mt FOB. Meanwhile, offers from smaller mills have been voiced at $450-460/mt FOB.

The tradable prices have been reported at $455-460/mt FOB, versus $465/mt FOB last week. In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have settled at $478-480/mt CFR for end-of-June shipment, against $480-485/mt CFR last week. Besides, offers for ex-China SAE1006 HRC have been heard at $485/mt CFR for end-of-June shipment, against $495/mt CFR last week.

Meanwhile, offers to the Middle East and Turkey have been estimated at $500-505/mt CFR, down by $5/mt on the lower end of the range week on week. However, according to one source, “Nobody is interested in the current offers as all customers expect lower prices.” Besides, offers from China for Q195 HRC in Turkey have settled at $495/mt CFR, down by $5/mt week on week.

In the meantime, average HRC prices in the Chinese domestic market have moved down compared to the previous week amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,370-3,530/mt ($468-490/mt) ex-warehouse on April 8, with the average price level RMB 70/mt ($9.7/mt) lower compared to that recorded on April 1, according to SteelOrbis’ data.

During the given week, the US-China tensions over tariffs have exerted a negative impact on market sentiments. Iron ore prices have moved down significantly, also weakening the support for HRC prices. Some Chinese HRC producers have implemented maintenance works, resulting in declining outputs, while the demand from downstream users has been limited. It is expected that HRC prices in the Chinese domestic market will edge down further in the coming week.

As of April 8, HRC futures at Shanghai Futures Exchange are standing at RMB 3,203/mt ($445/mt), decreasing by RMB 156/mt ($22/mt) or 4.6 percent since April 1, while down 1.9 percent compared to the previous trading day, April 7.     

 $1 = RMB 7.2038