Mills’ ex-China HRC prices fail to boost trade, traders’ prices mainly stable in occasional deals

This week has started with the decrease in local and futures HRC prices in China mainly caused by the increasing inventory levels of HRC in the domestic market given the contrast between high production and low demand for HRC in China. This in turn has weighed on HRC export quotations, with Chinese steel producers, including major ones, cutting their export offer prices for SS400 HRC by around $10/mt on average over the past week. Yet despite Chinese mills decreasing their export prices, most of them have failed to attract buyers as steel demand abroad has remained tepid, while most deals have been only heard from traders, who offer and try to sell HRC in short positions at lower levels.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $555-570/mt FOB, with a midpoint at $562.5/mt FOB, down by $10/mt week on week and down by $7.5/mt since the end of last week. Such a decline is mainly explained by the exclusion from the range of higher offers at $580/mt FOB, which this week are considered unworkable. “Benxi Steel is still officially offering its HRC at $580/mt FOB, but there is no logic in this offer as the real market price, including from Benxi Steel, has been heard at around $550-555/mt FOB,” a market insider told SteelOrbis.

Meanwhile, the tradable level for ex-China SS400 HRC has been voiced at $535-550/mt FOB, versus $540-550/mt FOB, depending on the destination, with the lower end of the range corresponding to offers for Chinese materials in Vietnam at around $545/mt CFR, down by $5-10/mt week on week. At the same time, while buying activity has remained slow in Vietnam, market insiders have reported several deals for around 1,000 mt each done in Pakistan at $560/mt CFR, down by $10/mt week on week.

Furthermore, according to sources, talk about a deal for 20,000 mt sold at $570/mt CFR in Turkey at the end of last week has been circulating in the market, though this information has not been confirmed by the time of publication, while most offers for ex-China SS400 and Q195 HRC have been voiced in Turkey at around $580/mt CFR, some still for October but most already for mid-Nov shipment. Besides, ex-China SS400 HRC has been offered in the Middle East, the UAE in particular, at around $570-580/mt CFR, the same as last week, with around four batches for S235JR HRC, 20,000 mt in total, reported to have been sold at $580/mt CFR at the end of last week.

Meanwhile, offers for ex-China HRC have been voiced in India at around $575-580/mt CFR. According to sources, several deals were done at the end of last week, though no details have been provided by the time of publication.

In the SAE1006 HRC segment, while Chinese mills have kept offering their materials at above $580/mt CFR, most offers have remained at $575-580/mt CFR, while several offers from traders have been heard at $565/mt CFR for mid-November shipment as of Tuesday, September 12.

In the meantime, inventories of HRC have increased to the highest level over the past three years, exerting a negative impact on local prices in China. Moreover, demand for HRC has not seen significant improvement yet, even though it is the traditional peak season of September, weakening the support to prices. In particular, domestic HRC prices in China are at RMB 4,020-4,050/mt ($558-562.5/mt) ex-warehouse on September 12, with the average price level RMB 64/mt ($9/mt) lower compared to that recorded on September 5, according to SteelOrbis’ data.

However, major Chinese steelmakers, including Baosteel and Anshan Iron and Steel, raised their ex-works prices for HRC for delivery in October by RMB 50/mt ($7/mt) and RMB 100/mt ($14/mt), respectively, signaling market players’ optimistic view as regards the future prospects for the HRC market. At the same time, iron ore prices have moved up, bolstering HRC prices from the cost side.

As of September 12, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,882/mt ($539/mt), decreasing by RMB 24/mt ($3.3/mt) or down by 0.6 percent since September 5, but up by RMB 31/mt ($4.3/mt) day on day.

$1 = RMB 7.1986