Chinese HRC exporters raise prices slightly in anticipation of more stimuli

Although ex-China HRC prices from mills have increased slightly over the past week, tradable prices have remained relatively stable or have shown only a slight upward bias given that trading activity for Chinese HRC exports has remained quiet, while both overseas buyers and traders have been holding back due to the uncertainty surrounding China’s steel market, the US presidential elections, and the US Federal Reserve’s upcoming monetary policy meeting. Additionally, concerns over the pending results of Vietnam’s antidumping investigation into HRC imports from China and India have further dampened trading in recent weeks.

Specifically, export offers for boron-added SS400 HRC given by major Chinese mills have settled at $510-525/mt FOB, with a midpoint at $517.5/mt FOB, up by $7.5/mt week on week. While a number of mills have been offering at $530-535/mt FOB, the same as last week, even despite the better mood locally, these offers are still considered to be too high to be acceptable, according to sources. Meanwhile, offers from smaller mills have been heard at $500-510/mt FOB, against $495-510/mt FOB last week.

At the same time, the tradable prices for SS400/Q235 HRC have been estimated at $500-510/mt FOB, up by $5/mt on the lower end of the range week on week. Offers for ex-China Q235 HRC in Vietnam have been voiced at $510-515/mt CFR, the same as last week. Furthermore, most offers for ex-China SS400 HRC in the Middle East have been heard at $510/mt FOB, or around $540/mt CFR, the same as last week. “Following deals at $525-535/mt CFR UAE last week, this week tradable prices have been estimated at $540/mt CFR, with talks for a deal signed at $540-545/mt CFR for 30,000 mt circulating in the market,” a market insider said.

Besides, offers for ex-China Q195/SS400 HRC in Turkey have been estimated at $535-540/mt CFR.

According to market insiders, sentiment in the steel and stock markets has been largely influenced by expectations of additional stimulus measures, following the start of the meeting of the standing committee of China’s National People’s Congress on Monday, November 4, while more details on potential fiscal support measures are expected to be heard when the meeting concludes on Friday, November 8.

Meanwhile, during the given week, HRC prices in the Chinese domestic market have moved down slightly amid slower purchases by downstream users, though on November 5 they indicated a slight increase amid rises in HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,630-3,680/mt ($511-518/mt) ex-warehouse on November 5, with the average price level RMB 14/mt ($2/mt) lower compared to October 29, but up by RMB 40/mt ($6/m) compared to the previous day, according to SteelOrbis’ data. Currently, both supply and demand in the HRC market have remained slack, exerting a negative impact on prices. However, the current National People’s Congress meeting in China may bolster market sentiments with announcements of further stimulus measures. “If the stimulus policies are not as strong as market players expect, HRC prices in the Chinese domestic market may come under downward pressure during the remainder of the year,” a market insider said.

As of November 5, HRC futures at Shanghai Futures Exchange are standing at RMB 3,591/mt ($506/mt), increasing by RMB 22/mt ($3.1/mt) since October 29, while up 1.07 percent compared to the previous trading day, November 4.

$1 = RMB 7.1016