Ex-China tradable HRC prices slip slightly amid weak domestic mood

This week, China’s steel market has remained in a clear seasonal slowdown, with limited price movement across the board. Thus, ex-China HRC export offers from major mills have remained relatively stable. However, most offers from smaller mills and traders have slipped by a few dollars, reflecting the continued lack of recovery signals in the domestic market and the slight downward movement in HRC futures prices.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have remined at $445-460/mt FOB, with a midpoint at $452.5/mt FOB, the same as last week. Meanwhile, smaller mills have been offering their HRC at around $438-445/mt FOB, down by $2/mt on the lower end of the range week in week. “Mills are seeing some relief in June due to lower costs and reduced inventory pressure. In the export market, activity has slowed, with leading mills keeping base prices unchanged as most allocations have already been filled for standard destinations,” a market insider told SteelOrbis.

In the meantime, the tradable price for ex-China SS400/Q235 HRC has been estimated at $435-443/mt FOB, down by $2/mt on the higher end of the range week on week. However, lower offers have also been occasionally reported in the market this week. In particular, most ex-China SS400 HRC offers in the UAE have been reported at $470-480/mt CFR, against $475-485/mt CFR last week. According to sources, a deal for around 12,000 mt of ex-China SS400 HRC was signed in Oman at around $475/mt CFR at the end of last week.

Besides, according to sources, while offers for ex-China Q195 HRC in Turkey have been voiced at $470-475/mt CFR, offers from non-VAT traders have been reported at around $465/mt CFR, the same as last week.

Meanwhile, offers for ex-China Q235 HRC in Vietnam have settled at around $453-458/mt CFR compared to $455-460/mt CFR last week, while offers for Q195 HRC have settled at $440/mt CFR, down by $5/mt week on week. 

“Overall, there is no major shift in either the domestic or export steel markets, while signs of easing geopolitical tensions may support stability ahead,” a representative of one mill said.

Average HRC prices in the Chinese domestic market have seen slight decreases compared to the previous week amid prevailing bearish sentiments. In particular, domestic HRC prices in China have settled at RMB 3,220-3,460/mt ($449-483/mt) ex-warehouse on June 25, with the average price level RMB 10/mt ($1.4/mt) lower compared to that recorded on June 18, according to SteelOrbis’ data. 

During the given week, the real estate industry has been performing poorly, exerting a negative impact on the HRC market. Meanwhile, the demand for HRC in the manufacturing industry has been under strong pressure, weakening the support for prices. Bearish sentiments have prevailed among market players due to the traditional off-season. The widespread rainy weather and high temperatures in the summer will continue to negatively affect the HRC market.

As of June 25, HRC futures at Shanghai Futures Exchange are standing at RMB 3,098/mt ($430/mt), increasing by RMB 5/mt ($0.7/mt) or 0.16 percent since June 18, while decreasing by 0.26 percent compared to the previous trading day, June 24. 

$1 = RMB 7.1668