Ex-China HRC offer prices have edged down over the past week amid the downtrend in HRC futures and domestic prices in China, which is connected with lower demand locally. Taking into account prevailing bullish sentiments in other global markets, foreign customers not only from Asia - which is a traditional destination for Chinese HRC exports, but from other countries, like Turkey for instance - have been interested in purchases.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $670-720/mt FOB for March shipment, moving down by $15/mt on average compared to January 5.
The tradable value has declined from $660/mt FOB for this grade a week ago to $650-660/mt FOB, with this level heard to be quite achievable from private sector mills who want to redirect some volumes from the local market where demand is weakening. Moreover, one deal from a trader, according to sources, has been reported for ex-China SS400 HRC at $645/mt CFR Vietnam this week, which translates to $635/mt FOB and is assessed as being too low for the majority of Chinese mills at the moment.
For SAE1006 re-rolling grade HRC, some private mills and traders have been offering $670-680/mt FOB, which is assessed by market sources as a tradable level for now. Offers from large Chinese mills are still at a higher level, at $690/mt FOB and above, but negotiations with them have been limited in the export market.
The most competitive offers for ex-China SAE1006 HRC in Vietnam have been reported at $680-690/mt CFR.
At least 10,000 mt of the same grade material from China have already been traded to Turkey at $720-725/mt CFR. Moreover, some fresh offers from a trading company have been heard at $710/mt CFR on Tuesday, January 12. This price level is quite competitive in Turkey, taking into account much higher prices from the CIS and local suppliers. Delivery of Chinese coils is assessed to be for May and June in recent contracts.
“The downtrend in local HRC prices and HRC futures prices amid the worsening Covid-19 pandemic in some regions has exerted a negative impact on ex-China HRC prices,” an international trader told SteelOrbis.
During the given week, HRC prices in the Chinese domestic market have declined amid the prevailing bearish sentiments among market players, especially due to the decreases in futures prices. Demand for HRC has been slack, even though inventory of HRC has been at relatively low levels. Cold weather has also been impacting local consumption.
Domestic HRC prices in China are at RMB 4,450-4,570/mt ($687-705/mt) ex-warehouse on January 12, with the average price level RMB 40/mt ($6/mt) lower as compared to January 5, according to SteelOrbis’ data. Compared with the price level on Friday, January 8, local quotations are RMB 85/mt ($13/mt) lower.
As of January 12, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,462/mt ($688.5/mt), decreasing by RMB 32/mt ($4.9/mt) or 0.71 percent since January 5.
$1 = RMB 6.4823