Ex-China HRC offer prices have moved down in the past week following slight rises in the previous week, after the sharp declines in local prices by as much as $49.5/mt in just two days. Concerns about firm supply because of stable production in the second half of the year, which is expected now despite earlier announcement of output restrictions, have put pressure on sentiments.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $950-1,020/mt FOB for September shipment, with a midpoint at $985/mt FOB, moving down by $15/mt on average compared to last week. The higher end of the range corresponds to the still high offers of large mills, which are not interested in export sales at the moment. The lower prices are from smaller mills. “Market players are concerned regarding the potential impact from carbon emissions reductions [which should not lead to severe production cuts], resulting in declines in ex-China HRC prices,” an international trader told SteelOrbis.
The tradable price level for SS400 coils has decreased to $920-930/mt FOB lately, down by $10/mt from last week. But trading has been very limited as fears of an export duty introduction are still strong and some sources have been saying that the export duty rate will be above 10-11 percent. For the distant markets like Latin America, the tradable level could be slightly higher - at $940/mt FOB or so, but no fresh deals have been reported so far.
Offers and the workable level for SAE1006 HRC from Chinese small mills and traders has been reported at $930-960/mt FOB. No demand has been seen from Vietnam, where bids are at $925/mt CFR maximum and inquiries are very limited.
During the given week, HRC prices in the Chinese domestic market have indicated sharp declines amid the big decreases in HRC futures prices and bearish sentiments among market players. On August 2 and 3, average local HRC prices have lost RMB 320/mt or $49.5/mt, according to SteelOrbis’ data, after the government announcement that China will avoid “campaign-style” carbon reduction efforts, and so crude steel production will not be urgently lowered in the second half of the year, as had been expected previously.
Demand for HRC has remained slack during the traditional off-season and amid the worsening Covid-19 pandemic situation in many regions of China. It is thought that HRC prices in the Chinese domestic market may edge down in the coming week.
Domestic HRC prices in China are at RMB 5,600-5,670/mt ($877-899/mt) ex-warehouse on August 3, with the average price level RMB 235/mt ($36.4/mt) lower as compared to July 27, according to SteelOrbis’ data. Compared with the price level on Monday, August 2, average local quotations are RMB 120/mt ($18.6/mt) lower.
As of August 3, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,608/mt ($868/mt), decreasing by RMB 288/mt ($44.6/mt) or 4.9 percent since July 27.
$1 = RMB 6.461