Gap between ex-China HRC offers from big mills and deal prices widens as bearishness grows

Although this week most big Chinese mills have decided to roll over their export prices, the tradable level has dropped further this week, especially in contracts to Asia, while to higher-priced destinations most traders have kept maintaining high prices. At the same time, domestic HRC prices in China have decreased over the past week amid the slower-than-expected post-holiday demand recovery and dropping futures prices.

At present, export offers for boron-added SS400 HRC given by major mills are at $650-670/mt FOB, with the midpoint at $660/mt FOB, the same as last week. “Most big mills are keeping their offers mainly unchanged, with only a few going slightly lower, while deal prices from smaller mills and traders differ a lot from official big mills’ offers,” a market insider said.

Thus, the tradable level for ex-China SS400 HRC has settled at $605-640/mt FOB, depending on the destination, versus $625-640/mt FOB last week. More specifically, smaller mills and traders have been offering SS400 HRC at around $620/mt CFR to Vietnam, down by $10-15/mt week on week, with several deals for 5,000-10,000/mt in total reported to have been done at $615-616/mt CFR this week. At the same time, offers to the Middle East have been mainly unchanged over the past week, standing at $690/mt CFR UAE (around $640/mt FOB), though most buyers have been reporting their bids at $670-680/mt CFR, according to sources.

In the SAE1006 HRC segment, offers to Vietnam from mills, including Benxi, Maanshan, Angang, Rizao and others, have settled at $655/mt CFR for April shipment, down by around $20/mt week on week. Meanwhile, ex-China offers to South America have been estimated at around $700-720/mt CFR Pacific coast, down by $10/mt week on week, in line with offers from South Korean suppliers, but around $80/mt lower than ex-Japan offers.

During the given week, HRC prices in the Chinese domestic market have seen decreases since, although downstream users have gradually resumed working after the Lantern Festival, demand has not seen a significant improvement so far. Meanwhile, HRC futures prices have indicated a fluctuating trend since last Friday, also signaling market players’ cautious sentiments.

Domestic HRC prices in China are at RMB 4,050-4,200/mt ($596-618/mt) ex-warehouse on February 7, with the average price level RMB 115/mt ($17/mt) higher than that recorded on January 31, according to SteelOrbis’ data.

As of February 7, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,069/mt ($599/mt), decreasing by RMB 85/mt ($12.5/mt) or 2.05 percent since January 31.

$1 = RMB 6.7967