Optimistic mood for ex-China HRC exports, but minimal support from demand so far

Ex-China HRC offer prices have edged up slightly over the past week amid signs of a rebounding trend in the local and futures markets given stock replenishment ahead of the holiday. Besides, the bullish mood among all foreign HRC suppliers has provided additional support to Chinese exporters. However, demand in all main destinations has remained slow to pick up steam for cargoes to be shipped in November.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $585-610/mt FOB for end-of-October and November shipments, with a midpoint at $597.5/mt FOB, up by $2.5/mt week on week.

Meanwhile, Chinese traders have decided to go higher as well, pushing the tradable level for ex-China SS400 HRC to around $575-585/mt FOB, up by $10-20/mt week on week. Besides, according to market insiders, most traders are refusing to sell at below $580/mt FOB. As a result, ex-China SS400 HRC offers to Vietnam have settled at $600/mt CFR, compared to $570-580/mt CFR last week. Meanwhile, offers to Pakistan have increased to $610-620/mt CFR, up by $10-20/mt week on week.

“Most suppliers, like those from Japan, Taiwan and even India, are aiming for higher offers, while HRC prices in Europe and Turkey have been increasing for a few weeks already. Besides, sentiment is bullish in most markets, including South America, after a typhoon hit a unit owned by South Korea’s POSCO in Pohang,” a market insider told SteelOrbis.

During the given week, HRC prices in the Chinese domestic market have moved up amid increasing HRC futures prices. Meanwhile, downstream users concluded purchases for HRC ahead of the Mid-Autumn Day holiday, exerting a positive impact on the market. However, downstream users have been unwilling to build up stocks in large quantities as most have fears that typhoon Muifa, which is expected to hit the southeast coastal areas of China this week, may weaken the demand for HRC.

Domestic HRC prices in China are at RMB 3,960-4,060/mt ($574-589/mt) ex-warehouse on September 13, with the average price level RMB 40/mt ($5.8/mt) higher as compared to September 6, according to SteelOrbis’ data.

As of September 13, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,864/mt ($561/mt), rising by RMB 95/mt ($14/mt) or 2.52 percent since September 6, but up RMB 73/mt ($10.6/mt) or 1.9 percent since Friday, September 9.

$1 = RMB 6.8928