Ex-China HRC price trend lacks clarity, though mood improves locally

The mood among market insiders has started to improve this week as some recovery has been reported in local HRC prices in China amid increasing HRC futures prices and the anticipated easing of monetary policy following the US interest rate cut by 50 basis points. At the same time, the ex-China HRC price trend has been unclear given that HRC offers from Chinese exporters have continued to fluctuate during the past week, with most CRC offers increasing since the beginning of last week but falling slightly since last Friday, September 13.

Specifically, export offers for boron-added SS400 HRC by major Chinese mills have settled at $460-465/mt FOB, for end of October-November shipment, with a midpoint at $462.5/mt FOB, up by $2.5/mt since the beginning of last week, but down by $5/mt since last Friday. Meanwhile, offers from smaller mills have been reported at $455-458/mt FOB, compared to $435-450/mt FOB last week. “Offers from Anfeng have been voiced at $456-458/mt FOB,” a Chinese trader said.

Meanwhile, the tradable prices for ex-China SS400 and Q195 HRC have been estimated at $450-455/mt FOB levels, versus $447-460/mt FOB at the end of last week and up by $10-15/mt since the beginning of last week. More specifically, following several deals for ex-China Q235/SS400 HRC at $460/mt CFR this week, new offers for ex-China Q235/SS400 HRC in Vietnam have been voiced at $465/mt CFR, up by $15/mt since Tuesday, September 10.

Furthermore, offers for ex-China Q195 and SS400 HRC in Turkey have been voiced at $490-495/mt CFR, while offers for SS400 HRC in the UAE have been estimated at $505/mt CFR. “There is talk about Chinese offers at as low as $475/mt CFR, but most believe this is not possible as the current freight is very high at around $40/mt,” a market insider told SteelOrbis.

At the same time, domestic HRC prices in China are at RMB 3,170-3,240/mt ($446.5-456/mt) ex-warehouse on September 19, with the average price level RMB 67/mt ($9.4/mt) higher compared to that recorded on September 10, according to SteelOrbis’ data.

This week, the US has announced an interest rate cut of 50 basis points, attracting market players’ guesses as regards the prospects for an easing of monetary policy in China in the coming period, which could lead to a soft landing for China’s economy. Meanwhile, since the National Day holiday (October 1-7) is approaching, market players think downstream users will build up some stocks of HRC, which will bolster its prices. At the same time, HRC futures prices have increased, positively affecting prices in the spot market. It is thought that HRC prices in the Chinese domestic market may edge up in the coming week.

As of September 19, HRC futures at Shanghai Futures Exchange are standing at RMB 3,249/mt ($458/mt), increasing by RMB 113/mt ($16/mt) or 3.6 percent since September 10, while up 1.03 percent compared to the previous trading day, September 18.

$1 = RMB 7.0983