Ex-China HRC offer prices have continued their downtrend and the pace of their decline has increased as mills have dropped prices sharply, adding to the low-priced position prices from traders. This drop in export prices from China has followed the decreases seen in ferrous metal futures prices and a fall by as much as $170/mt in the past week in the local HRC market in China due to the central government’s measures to curb rapid rises in commodity prices.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $890-990/mt FOB for July shipment, with a midpoint at $940/mt FOB, moving down by $105/mt on average compared to May 18, and down by $75/mt compared to late last week.
The tradable level for SS400 HRC is at $890-910/mt FOB, sources have said. This is $30-40/mt lower than the previous level at $930-940/mt FOB. Market sources said that mills have been selling some tonnages at this level to traders, who need to cover position sales.
At the same time, the workable price for ex-China SAE1006 HRC has come down to $900-920/mt FOB. This level has been confirmed in some deals to the Asian market. For instance, about 10,000 mt of ex-China SAE1006 HRC were traded to Pakistan at $930-950/mt CFR with the freight from China assessed at not below $30/mt. In addition, at the same range of $930-950/mt CFR there have been offers to the UAE. Vietnamese customers have also been in negotiations at $950/mt CFR at the highest, sources have said.
Declines in the export market have reflected falling local prices in China even despite rumours of a possible introduction of export duty from June 1. Market sources have heard of a possible average of export duty on HRC at 10 percent, though no official reports have been issued so far.
“HRC prices in the Chinese domestic market have seen further declines, exerting a negative impact on ex-China HRC offer prices, while buyers have been cautious in concluding purchases due to the prevailing bearish sentiments towards the prospects for the future market,” an international trader told SteelOrbis.
During the given week, HRC prices in the Chinese domestic market have declined sharply amid the downtrend in HRC futures prices. Following big declines, bearish sentiments have prevailed among market players. Domestic HRC prices in China are at RMB 5,340-5,460/mt ($830.5-849.4/mt) ex-warehouse on May 25, with the average price level RMB 1,095/mt ($170/mt) lower as compared to May 18, according to SteelOrbis’ data. Compared with the price level on Monday, May 17, average local quotations are RMB 20/mt ($3/mt) lower.
As of May 25, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,980/mt ($821.5/mt), decreasing by RMB 699/mt ($109/mt) or 11.7 percent since May 18.
$1 = RMB 6.4283