Uneven gains in ex-China HRC prices as exporters take diverse approaches

This week, although overall ex-China HRC trading activity has remained slow, some upward movement has emerged in export prices. The pace of the increases has varied: major Chinese mills have raised their offers only slightly as they remain focused on steady export expansion, while smaller private mills and traders have applied more noticeable hikes. Meanwhile, offers from non-VAT traders have also edged up only marginally and have continued to be the most competitive in the market.

Specifically, the price range for boron-added SS400 HRC from large Chinese mills has been estimated at $465-485/mt FOB, with a midpoint at $475/mt FOB, up by $2.5/mt week on week. Meanwhile, offers from smaller private mills have been voiced mainly at $465-475/mt FOB, compared to $455-460/mt CFR last week.

At the same time, while offers from most Chinese traders have settled at $465-475/mt FOB, up by $10-15/mt week on week, according to sources offers from non-VAT traders have been voiced at $450-452/mt FOB, up by $2-5/mt week on week. “Inventory in the domestic market keeps falling, hitting a 100-day low, and, with the shift in steel futures prices, more speculative activity has emerged. The market is now better balanced. Most prices remain unchanged and allocation is sufficient for buyers. Meanwhile, the export market is mainly stable in terms of trade activity, while mills have raised their HRC base prices a little. Going forward, the steel market will be influenced more by macroeconomic news as it has limited capacity for rapid changes during the winter season,” a market source told SteelOrbis.

In particular, ex-China 2,000 mm Q235 HRC offers in Vietnam have been voiced at $475-480/mt CFR, mainly the same as last week.

Meanwhile, Chinese offers for SS400 HRC to other destinations like the Middle East have been estimated at $485-495/mt CFR UAE from traders, up by $5/mt on the lower end of the range week on week, while trade activity has been close to zero in the region due to holidays.

Besides, Chinese Q195 HRC offers to Turkey have been estimated at $495-505/mt CFR from Chinese suppliers with VAT, up by $5-15/mt week on week, while offers from non-VAT Chinese sellers have been estimated at around $485/mt CFR, up by $5/mt week on week.

In the meantime, average HRC prices in the Chinese domestic market have increased compared to the previous week amid rising HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,360-3,470/mt ($475-490/mt) ex-warehouse on December 2, with the average price level RMB 13/mt ($1.8/mt) lower compared to that recorded on November 25, according to SteelOrbis’ data. Positive sentiments have prevailed among market players approaching the end of the year as they expect stimulus policies to be issued by the government. However, in the traditional offseason, demand for HRC has remained slack, which has exerted a negative impact on prices.

At the same time, on December 1, Jiangsu Province-based Shagang Group cut its offer prices for 5.75 mm x 1,500 mm Q235B HRC by RMB 150/mt ($21/mt) to RMB 3,500/mt ($495/mt) ex-works, for delivery in December, which may negatively affect market sentiments.

As of December 2, HRC futures at Shanghai Futures Exchange are standing at RMB 3,325/mt ($470/mt), increasing by RMB 16/mt ($2.3/mt) or 0.5 percent since November 18, while rising by 0.3 percent compared to the previous trading day, December 1.

 $1 = RMB 7.0794