Ex-China HRC prices affected by new futures price slump, unexpected sales heard in Europe

Although most big Chinese mills have kept their offers rather stable over the past week, ex-China HRC prices from smaller mills and from a number of traders have shown some negative bias affected by fluctuations in local and futures HRC prices. In the meantime, although trade activity has remained slow in almost all main trade destinations, this week reports about ex-China HRC sales in Europe have been circulating in the market given the most competitive prices among all overseas suppliers even despite the high antidumping duty.

At present, offers from big mills for boron-added SS400 HRC have settled at $460-475/mt FOB, with a midpoint at $467.5/mt FOB, mainly the same as at the end of last week, and up by $2.5/mt week on week, though offers from smaller mills and most traders have been estimated at $455-465/mt FOB, against $460-465/mt FOB last week.

More specifically, offers for ex-China Q235/SS400 HRC through traders in Vietnam have settled at $465-468/mt CFR, against $473-475/mt CFR last week. Besides, offers for ex-China SS400 HRC in Pakistan have been voiced at $490/mt CFR, down by $10/mt week on week.

Furthermore, offers for ex-China Q195 and SS400 HRC in Turkey have been voiced at $500-505/mt CFR, down by $5/mt week on week, while offers in the Middle East, the UAE in particular, have been estimated at $500-510/mt CFR, against $500-520/mt CFR last week.

In the meantime, while trade activity has been extremely limited in the main trade destinations, including Asia and the Middle East, Chinese suppliers are reported to have sold around 20,000 mt of SAE1006 HRC to Europe at around €580/mt CFR, or $640/mt CFR, which translates to around $480/mt FOB including 18.10 percent duty. “Chinese HRC has high duty at 18.10-35.90 percent, depending on the supplier, but only two or three mills are workable with the lowest rate of dumping duty at 18.1 percent, and they are all owned by the Hebei group,” a trader from Europe told SteelOrbis. At the same time, several offers for ex-China HRC have already been heard at €540/mt CFR southern Europe, according to sources.

Meanwhile, average HRC prices in the Chinese domestic market have indicated declines amid decreasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,190-3,290/mt ($449-463/mt) ex-warehouse on September 3, with the average price level RMB 46/mt ($6.5/mt) lower compared to that recorded on August 27, according to SteelOrbis’ data.

During the given week, HRC futures prices have moved down, weakening the support for prices in the spot market. Both the demand and supply in the HRC market have declined, while transaction activities have not improved significantly, negatively affecting HRC prices. At the same time, major Chinese steelmaker Shagang Group announced a cut in its offer prices for Q235 5.5 mm x 1,500 mm HRC by RMB 200/mt ($28/mt) to RMB 3,500/mt ($493/mt) ex-works for delivery in September, exerting a negative impact on market sentiments. It is thought that HRC prices in the Chinese domestic market will likely edge down in the coming week.

As of September 3, HRC futures at Shanghai Futures Exchange are standing at RMB 3,214/mt ($452/mt), decreasing by RMB 115/mt ($16.2/mt) or 3.5 percent since August 27, while down 2.96 percent compared to the previous trading day, September 2.

$1 = RMB 7.1112