Ex-China HRC offer prices have moved up sharply amid production curbs in Tangshan and the rising trend of HRC futures prices in China. But trading and overall activity of Chinese producers in the export market has been very limited due to the expected cut in the HRC export tax rebate.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $765-790/mt FOB for May shipment, with a midpoint at $777.5/mt FOB, moving up by $27.5/mt on average compared to last week.
The tradable price level for this grade has increased by $10/mt over the past week from $720-730/mt FOB to $735/mt FOB, mainly for the Asian market, but a few traders believe that it will be hard to get the price from any mill at below $740/mt FOB. In any case, due to continued talks about the expected cut in the HRC export tax rebar from 13 percent to 9 percent or below (other rumours have said it may go down to 8.6 or four percent) the HRC export market has been inactive over the past week and deals have been very limited.
The indicative level for position ex-China re-rolling grade HRC SAE1006 has been heard at $775-780/mt CFR Vietnam, but firm offers have been very rare. Most producers will ask $790-810/mt CFR, market sources believe. Instead, Vietnamese buyers have decided to book ex-India HRC at $780/mt CFR.
“Few steelmakers gave offer prices for ex-China HRC as they waited for accurate news on the export tax rebate, while the tight supply of HRC also exerted a positive impact on ex-China offer prices,” an international trader told SteelOrbis.
During the given week, market players’ sentiments have been boosted by the sharp rises in HRC futures prices. However, downstream users have been unwilling to accept big rises in HRC prices. At the same time, inventory of HRC has been at a relatively low level, which will provide support for prices.
Domestic HRC prices in China are at RMB 5,000-5,100/mt ($769-785/mt) ex-warehouse on March 23, with the average price level RMB 130/mt ($20/mt) higher as compared to March 16, according to SteelOrbis’ data. Compared with the price level on Monday, March 22, local quotations are RMB 11/mt ($2.3/mt) higher.
As of March 23, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,128/mt ($789/mt), increasing by RMB 197/mt ($30.3/mt) or 4.0 percent since March 16.
$1 = RMB 6.5036