Tradable ex-China HRC prices rebound amid hikes locally, future trend still uncertain

This week, most big Chinese steel producers have kept prices mainly unchanged despite rises in the futures market, though smaller mills and traders, which significantly dropped their offers at the beginning of last week, have decided to go higher. As a result, the tradable levels for ex-China HRC have improved slightly. However, trade activity has been slow in most main regions given the uncertainty over the future price trend.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $520-530/mt FOB for January shipment, with a midpoint at $525/mt FOB, down by just $2.5/mt week on week. “Most big mills have not changed their prices, though smaller mills have decided to go higher, increasing their offers to $510-520/mt FOB from $505-515/mt FOB last week,” a market insider said.

At the same time the tradable level for ex-China SS400 HRC has been heard at $490-520/mt FOB, up by $7.5/mt over the past week as the lower end of the range has increased by $15/mt. Market sources said that some buyers in Southeast Asia can accept $490/mt FOB from China. Offers for SS400 coils to Vietnam have increased to $510-535/mt CFR, though at the beginning of last week they were at $500-510/mt CFR and the last deals were even at $490/mt CFR. While very low offers from Chinese traders have started to disappear, some buyers in Vietnam have been assessing the tradable level at $500/mt CFR. A deal for ex-China SS400 HRC has been reported to Pakistan at $525/mt CFR, up by $15-25/mt over the past week.

In the SAE HRC segment, offer prices have also posted some increases. Offers of this grade of coil to Vietnam have reached $540/mt CFR, versus $520-540/mt CFR on Friday and deals earlier last week at $510/mt CFR.

In more distant markets, prices from China have already increased by at least $20/mt since last week. In particular, new offers for Chinese SAE1006 HRC to Turkey have been reported at $570-590/mt CFR, up by $20-30/mt from the previous deals reported last week.

In the UAE, Chinese suppliers have been asking for SS400 HRC $560-570/mt CFR, up by $20-30/mt over the past week. “There is an increase of $20-40/mt from the last deals done at the beginning of last week, depending on material grade,” a source said.

In South America, offers from China for SAE1006 HRC have been at $570-590 CFR Pacific coast.

During the given week, HRC prices in the Chinese domestic market have bottomed up amid the rising HRC futures prices and the improved sentiments among market players. Meanwhile, steelmakers implemented production restrictions, reducing outputs and inventory levels, also exerting a positive impact on the HRC market. However, the Covid-19 restriction measures in many regions have weakened the support for HRC prices. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 3,660-3,830/mt ($507.0-531.0/mt) ex-warehouse on November 8, with the average price level RMB 90/mt ($12.5/mt) higher as compared to November 1, according to SteelOrbis’ data.

As of November 8, HRC futures at the Shanghai Futures Exchange are standing at RMB 3,645/mt ($505/mt), rising by RMB 92/mt ($12.8/mt) or 2.6 percent since November 1.

$1 = RMB 7.215