Mood still positive for Chinese HRC exports, but minimal support from demand

Ex-China HRC offers prices have edged up again over the past week amid the ongoing rebounding trend in the local and futures markets in China given improved demand from downstream users and decreasing outputs due to the temporary control measures implemented during two sessions government meetings. Besides, the bullish mood among all foreign suppliers has provided additional support to Chinese exporters. However, demand in all main destinations has continued to be slow to pick up steam for new cargoes.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $680-690/mt FOB for end-of-May and June shipments, with a midpoint at $685/mt FOB, up by $10/mt week on week. According to sources, lower offers at $665/mt FOB have been voiced by Anfeng Steel, though other mills have been offering at $680-690/mt FOB, while some are already aiming for $700/mt FOB. 

Meanwhile, Chinese traders have decided to go higher as well, pushing the tradable level for ex-China SS400 HRC to around $655-675/mt FOB, up by $15/mt week on week. Most ex-China SS400 HRC offers to Vietnam have been reported at $670-675/mt CFR, compared to $650/mt CFR last week, though several offers have still been heard at the lower $663/mt CFR level. Ex-China SS400 HRC in Pakistan have been voiced at $700/mt CFR, up by $15-20/mt week on week, while customers in the Middle East have reported ex-China offers at $720-730/mt CFR, versus $710-730/mt CFR last week. 

“Continuous price growth is literally scaring most of the buyers, so they prefer to wait and see for now,” a Chinese trader said. 

In the SAE1006 HRC segment, offers from Chinese suppliers have been voiced at $690-710/mt CFR Vietnam, versus $690-695/mt CFR last week. Meanwhile, offers in Pakistan have settled at $725/mt CFR, compared to $710-720/mt CFR last week. At the same time, some big volumes were sold to Turkey at around $675/mt FOB last week, which translates to around $722-725/mt CFR, though this week, according to Chinese traders, most offers have been reported at not below $740/mt CFR. 

In the meantime, HRC prices in the Chinese domestic market have moved up significantly this week. In particular, major Chinese steelmaker Baowu Group issued its prices for April, raising them by RMB 200/mt ($29/mt), bolstering HRC prices in the spot market. At the same time, some regions implemented temporary control measures during the two sessions meetings, exerting a negative impact on the production output of HRC, which provided support for prices. Moreover, import iron ore prices have moved on an overall uptrend, positively affecting HRC prices from the cost side. It is thought that HRC prices in the Chinese domestic market will likely edge up in the coming week. 

Domestic HRC prices in China are at RMB 4,500-4,570/mt ($652-662/mt) ex-warehouse on March 14, with the average price level RMB 190/mt ($27.6/mt) compared to that recorded on March 7, according to SteelOrbis’ data. 

As of March 14, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,467/mt ($647.4/mt), increasing by RMB 124/mt ($18/mt) or 2.85 percent since March 7. 

$1 = RMB 6.8949