Mood among Chinese HRC exporters worsens again after slight rise last week

Although ex-China HRC prices from big mills have remained at relatively stable levels as compared to the previous week, the mood has started to worsen among Chinese exporters, with many mills preferring to refrain from new offers, waiting for the trend to become clearer. At the same time, with worse sentiments appearing in the HRC futures market, the tradable level for HRC has lost at least $10/mt since the end of last week in new offers from Chinese traders globally.

At present, export offers for boron-added SS400 HRC from most big mills are estimated at $535/mt FOB, the same as last week, though some mills are reported to have been offering their coils at lower levels, including Anfeng Steel, which is offering at $529/mt FOB, while some producers, on the contrary, are still quoting at very high levels, like Shangang Rizao and Benxi Steel at $560/mt FOB and $570/mt FOB, respectively, though according to sources, “nobody takes their prices seriously.” Thus, the general range of ex-China SS400 HRC prices from mills has been assessed at around $530-560/mt FOB, against $535-550/mt FOB last week.

In the meantime, the tradable price level for ex-China SS400 HRC has been estimated at $510-535/mt FOB, down by $10/mt since Friday, March 22, but still $2.5/mt higher compared to offers heard at the beginning of last week. More specifically, the lower end of the range corresponds to offers and deal prices at $520/mt CFR in Vietnam, versus $530-535/mt CFR at the end of last week. Besides, offers for ex-China SS400 HRC in Pakistan have been voiced at $540/mt CFR, down by $5/mt week on week, while offers for Q195 HRC have settled at $530/mt CFR, compared to $535/mt CFR reported last week.

The higher end of the range corresponds to offers in higher-price destinations, including the Middle East and Turkey. In particular, ex-China Q195/SS400 HRC offers to the UAE have been estimated at $565-570/mt CFR from mills, mainly the same as last week, but, according to sources, a few offers from non-VAT traders have been heard at $550-560/mt CFR for May shipment. Furthermore, following numerous deals done in Turkey last week, most ex-China offers have settled at $560-565/mt CFR, the same as at the end of last week.

Meanwhile, average HRC prices in the Chinese domestic market have indicated an uptrend, though sources believe the trend may reverse soon given the recent drop in HRC futures prices. Specifically, domestic HRC prices in China have settled at RMB 3,870-3,970/mt ($545-559/mt) ex-warehouse on March 26, with the average price level RMB 20/mt ($2.8/mt) higher compared to that recorded on March 19, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have indicated a rebounding trend amid the improving demand from downstream users. Market sentiment has also improved in the given week, exerting a positive impact on HRC prices. However, supply of HRC has been sufficient, weakening the support for prices. Moreover, on March 26, ferrous metal futures indicated big declines: for instance, iron ore futures prices decreased by 3.72 percent, and HRC futures prices declined by 2.17 percent, compared to the previous trading day, March 25, reflecting the worsening of market sentiments, which will negatively affect HRC prices. Meanwhile, import iron ore prices have decreased over the past few days.

As of March 26, HRC futures at Shanghai Futures Exchange are standing at RMB 3,735/mt ($526/mt), decreasing by RMB 53/mt ($7.5/mt) or 1.4 percent since March 19, while down 2.17 percent compared to the previous trading day, March 25. 

$1 = RMB 7.0943