Chinese HRC export prices have stopped their sharp fall by the end of this week and higher futures prices signal the possibility of a gradual improvement next week. Nevertheless, the mood in Vietnam’s import HRC market has remained pessimistic as demand has been poor this week and is unlikely to improve next week.
Ex-China SS400 HRC price has fallen below the psychological level of $900/mt CFR. A deal for 5,000-10,000 mt has been heard at $880/mt CFR, with the buyer bearing the risks of the potential export tax expected from June 1 or July 1. “This is a fair price. We expected that prices would go below $900/mt CFR,” a local trader from Vietnam said. But a number of sources agree that such a low price level is more as an exception and that the lowest possible prices from small Chinese mills for SS400 coils are at $915-930/mt CFR.
As reported earlier, the reference price for SAE1006 HRC, mainly reflecting negotiations with Chinese sellers, is at $930-970/mt CFR. The highest end of the range corresponds to the price from the bigger mills, while the lower end corresponds to offers from small producers. Traders said that, even in the case of some additional discounts, it is hard to find a taker in Vietnam, taking into account the slowdown of demand due to seasonal factors and the spread of Covid-19. If the export duty is imposed at 10 percent, it will mean that, instead of $930/mt CFR for example, the buyer will have to pay $1,023/mt CFR, according to one of the trading sources. So most buyers have been reluctant to take risks in such conditions.
On Friday, May 28, local HRC prices in China have added RMB 205/mt ($32/mt) to RMB 5,400-5,450/mt ($846-853/mt) ex-warehouse, according to SteelOrbis’ data. The rebound has come after the CISA called for the stabilization of prices and after the improvement in futures prices.