The sentiment in China’s HRC export market is still positive, despite the lack of strength of the local market. Most Chinese HRC suppliers have maintained export offer prices at a high level, while some have been negotiating sales with small discounts as buyers have basically accepted the current price level and steelmakers need to bear the potential risks from the anticipated tax rebate cut.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $890-920/mt FOB for June shipment, with a midpoint at $905/mt FOB, moving down by $5/mt on average compared to late last week, while steelmakers are accepting all risks relating to the awaited tax rebate cut. The final announcement by the government is expected by May 1, so it is still unclear will the current rebate of 13 percent be lowered to zero or to four percent or 8-9 percent.
Some deals, according to sources, for boron-added SS400 HRC from China have been heard at $890-910/mt FOB this week for distant destinations like South America. However, negotiations at a lower level of $870-880/mt FOB were also heard with some customers late last week and early this week.
In the re-rolling SAE1006 HRC segment, a few contracts to the Vietnamese market for ex-China material were heard at $910/mt CFR last week and at $930-940/mt CFR the most recently. One of the major producers has sold 20,000 mt of thin HRC not above 2 mm at $960/mt CFR Vietnam.
“Though China’s Ministry of Industry and Information Technology (MIIT) urged relevant departments to pay attention to the stabilization of raw material prices, ferrous metal futures prices moved up again following previous downward corrections, bolstering ex-China HRC prices, though there was some room for negotiation for buyers on the lower end,” an international trader told SteelOrbis.
During the given week, domestic HRC prices have risen due to the decreasing deliveries from steelmakers amid maintenance works. Steelmakers and traders have been seeking to bolster their HRC prices. However, downstream users have been quite cautious as regard the future prospects for the market at the current high levels of prices, even though inventory of HRC has been at a relatively low level.
Domestic HRC prices in China are at RMB 5,470-5,500/mt ($840-845/mt) ex-warehouse on April 20, with the average price level RMB 65/mt ($10/mt) higher as compared to April 13, according to SteelOrbis’ data. Compared with the price level on Monday, April 19, local quotations are RMB 15/mt ($2.3/mt) lower.
As of April 20, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,429/mt ($834/mt), increasing by RMB 26/mt ($4/mt) or 0.48 percent since April 13.
$1 = RMB 6.5103