Gap between ex-China HRC offers from mills and deal prices widens

Although this week most big Chinese mills have decided to roll over their export prices, the tradable level has dropped in contracts. At the same time, domestic HRC prices in China have decreased over the past week, following a significant drop in futures prices.

At present, export offers for boron-added SS400 HRC given by major mills are at $580-610/mt FOB for November shipment, with a midpoint at $595/mt FOB, down by $2.5/mt week on week. “Most mills are keeping their official offers mainly unchanged, with only a few going slightly lower. But deal prices differ a lot from official offers,” a market insider said.

Thus, the tradable level for ex-China SS400 HRC has settled at $550-570/mt FOB, down by $15-25/mt over the past week. In particular, Chinese traders have signed several deals with Vietnamese customers at as low as $570/mt CFR, compared to $570-580/mt CFR last week, while new bids from Vietnam have been reported at $565/mt CFR. Besides, a few deals for ex-China SS400 HRC have been heard in Pakistan at $580-585/mt CFR. Furthermore, according to market insiders, small batches of ex-China coils are reported to have been sold by traders to South Korea at $585-595/mt CFR, down by $20/mt week on week.

In the SAE1006 HRC segment, Chinese suppliers have succeeded in concluding new sales to the Middle East, selling around 30,000 mt at $640/mt CFR. Meanwhile, offers to South America have been reported at around $660-680/mt CFR, down by $10/mt on the higher end of the range over the past two weeks. “Several deals for ex-China HRC have been reported to the Pacific coast at discounts, and trade is expected to revive for November shipments materials in the short run,” a market insider said. However, almost no offers for ex-China SAE1006 HRC have been reported in Vietnam, with the indicative level standing at $600-610/mt CFR, compared to $610-620/mt CFR last week.

During the given week, HRC domestic prices have moved down as demand has not seen any significant improvement following the Mid-Autumn Day holiday. Besides, HRC futures prices have moved on a downtrend amid the negative impact of typhoon Muifa. At the same time, downstream users may build up certain stocks ahead of the National Day holiday, which will bolster HRC prices to some extent in the near future.

Domestic HRC prices in China are at RMB 3,890-4,000/mt ($560-576/mt) ex-warehouse on September 20, with the average price level RMB 63/mt ($5.8/mt) lower as compared to September 13, according to SteelOrbis’ data.

As of September 20, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,704/mt ($533/mt), decreasing by RMB 160/mt ($23/mt) or 4.1 percent since September 13, and down RMB 54/mt ($7.8/mt) or 1.4 percent since Friday, September 16.

$1 = RMB 6.9468