Prices in the local Chinese HRC market dropped significantly over recent working days and, subsequently, some traders have started to offer and sell HRC position cargoes in the export market at much lower prices. Mills, however, have been less flexible so far and are mainly avoiding any drops in prices. Besides, some mills have even tried to correct their offers upwards, expecting better market conditions in the coming period, SteelOrbis has learned from market sources.
Official offers from large mills for boron-added SS400 have remained mainly unchanged so far, at $815-830/mt FOB, with the lower end of the range increasing from $810/mt FOB last week. “Most of the mills have kept prices at $820-825/mt FOB, but Benxi Steel has managed to increase its offer by $10/mt to $830/mt FOB, Shagang Steel Group offers at $850/mt FOB, while another producer Anfeng Steel, on the contrary, has lowered its price by $10/mt to $805/mt FOB,” a market insider told SteelOrbis.
At the same time, the tradable level for SS400 has dropped to $785-795/mt FOB, down by $15/mt week on week. In particular, a number of traders have been offering position cargoes at much lower levels in Vietnam this week. After a contract for a position cargo from China was reported at around $825/mt CFR Vietnam last week, several deals have been signed at $820/mt CFR this week. Besides, new position offers from traders for March-April shipments SS400 HRC have been reported at $815/mt CFR Vietnam, while customers’ bids have already been voiced at $805/mt CFR. “The future market direction is totally unclear. On the one hand, Chinese suppliers are still optimistic, believing that, with the continuous resumption of downstream enterprises, steel demand will be gradually increased: on the other hand, falling futures prices due to government scrutiny on iron ore may negatively affect export prices in the short run,” a mill’s representative stated.
During the given week, HRC prices have seen big declines amid the downward trends seen in HRC and iron ore futures prices. The decreases in iron ore prices have weakened the support for HRC prices. Meanwhile, the demand from downstream users has not been released completely as some market players may come back to the market after the Lantern Festival. It is expected that HRC prices in the Chinese domestic market will likely move sideways in the coming week.
Domestic HRC prices in China are at RMB 4,870-4,980/mt ($766-783/mt) ex-warehouse on February 15, with the average price level RMB 116/mt ($25.2/mt) lower as compared to February 8, according to SteelOrbis’ data.
As of February 15, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,843/mt ($761.5/mt), declining by RMB 218/mt ($34.1/mt) or 4.3 percent since February 8.
“Several government departments in China stated that they will closely monitor unusual movements in the iron ore market, negatively affecting iron ore futures prices, dragging down HRC futures prices accordingly,” an international trader stated.
$1 = RMB 6.3605
