Tradable ex-China HRC prices drop by over $20/mt as mood worsens amid falls in local and futures prices

Although this week most big Chinese mills have decided to roll over their export prices, sentiments among Chinese small mills and traders, who were bullish during previous weeks, have worsened following the sharp drops in futures prices and local prices in China. As a result, the tradable level has decreased by around $25/mt over the past week and to some destinations, like Vietnam, by around $30/mt as compared to last week’s offers.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $670-690/mt FOB, for end-of-May and June shipments, with a midpoint at $680/mt FOB, down by $5/mt week on week. “Although big mills like Benxi, Rizhao and Shagang have maintained their offers at $680-690/mt FOB, some mills have settled their offers at $670-675/mt FOB. However, Anfeng has decreased its prices by $15/mt to $650/mt FOB, while its offer to Vietnam has been heard at as low as $635/mt CFR,” a market insider said.

Meanwhile, following the significant increase in HRC export offers seen during previous weeks, at the beginning of this week signs of falling prices have emerged in the market as Chinese traders and smaller mills have started to cut their offers given the sharp falls in futures prices for HRC and ferrous products. Thus, the tradable level for ex-China SS400 HRC has settled at $625-640/mt FOB, versus $655-675/mt FOB last week, with the lower end of the range corresponding to offers in Vietnam at $635 CFR, which have already been fixed in a few deals. At the same time, several deals for ex-China SS400 HRC have been reported in Pakistan at $665/mt CFR, compared to offers at $680-700/mt CFR last week. Besides, a deal for around 25,000 mt of ex-China material has been reported in Egypt at slightly above $690/mt CFR, according to sources.

Furthermore, in the SAE1006 HRC segment, offers from Chinese suppliers have dropped as well. In Vietnam, ex-China SAE1006 coils have been offered at $685-700/mt CFR, down by $5-10/mt week on week. Besides, a deal for 1,000 mt of ex-China SAE1006 HRC has been reported at $680/mt CFR Pakistan, versus offers at $720/mt CFR last week. Meanwhile, according to sources, Chinese traders have dropped their offers for Q195 HRC in Turkey to as low as $690/mt CFR, as “too many Chinese traders fighting to sell in Turkey”. However, big Chinese mills have kept offering at around $720-730/mt CFR Turkey. At the same time, a deal for around 10,000-15,000 mt of ex-China HRC has been heard in the UAE at $730/mt CFR for May shipment, which corresponds to last week’s offers.

In the meantime, during the given week, HRC prices in the Chinese domestic market have moved on an overall downtrend amid the slowdown in the release of demand from downstream users. Currently, HRC producers’ capacity utilization rates are at relatively high levels, increasing the supply to the spot market, which has negatively affected market sentiments. At the same time, iron ore prices have moved down sharply amid the warning issued by China’s National Development and Reform Commission (NDRC), which will weaken the support for HRC prices. However, some market players still expect better demand in the near future due to the anticipated peak season in March and April.

Domestic HRC prices in China are at RMB 4,410-4,450/mt ($641-647/mt) ex-warehouse on March 21, with the average price level RMB 110/mt ($16/mt) lower compared to that recorded on March 14, according to SteelOrbis’ data.

As of March 21, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,273/mt ($621/mt), decreasing by RMB 194/mt ($28/mt) or 4.34 percent since March 14.

$1 = RMB 6.8763