Ex-China HRC prices emerge from downtrend amid rebound in futures and local offers

The long-standing downward trend of Chinese HRC export prices has started to reverse this week, with Chinese mills hiking offers by around $5/mt week on week while Chinese traders have increased their prices considerably more – by around $13.5/mt on average, standing in line with mills’ offers. Such an increase has been mainly attributed to the rebound in futures HRC prices and significant rises in local HRC prices in the country. Though no visible improvement in buying interest has been seen in key markets due to still slow demand globally, coupled with cautiousness of most buyers caused by news abound antidumping investigations against ex-China coils.

At present, export offers for boron-added SS400 HRC from large Chinese mills have settled at $460-470/mt FOB, for October shipment, with a midpoint at $465/mt FOB, up by $5/mt week on week. Meanwhile, offers from traders, which are usually lower than mills’ prices by at least $10-15/mt, this week have aligned to mills’ level, increasing by around $13.5/mt on average over the past week, reaching $460-465/mt FOB for October shipment.

More specifically, offers for ex-China Q235/SS400 HRC through traders in Vietnam have settled at $473-475/mt CFR, versus $455/mt CFR reported at the beginning of last week, which translates to around $460-462/mt FOB. At the same time, while several offers for ex-China Q195 HRC trough traders have been still voiced in Pakistan at $475/mt CFR, new offers for Q235/SS400 HRC have been reported as high as $500/mt CFR from a number of Chinese suppliers.

Offers from Chinese suppliers for Q195/SS400 HRC in the Middle East and Turkey have increased this week by around $20/mt week on week, reaching $500-520/mt CFR UAE and $505-510/mt CFR Turkey, respectively.

At the same time, while trade in most key destinations has been limited, Chinese suppliers have succeeded in selling sizable volumes in India. In particular, according to sources, at the end of last week Chinese suppliers have reportedly sold around 70,000 mt in total of SAE1006 HRC at $480-495/mt CFR, depending on supplier, for late September-early October shipment.

Meanwhile, average HRC prices in the Chinese domestic market have seen significant rises amid the increasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,260-3,330/mt ($458-468/mt) ex-warehouse on August 27, with the average price level RMB 103/mt ($14.5/mt) higher compared to that recorded on August 20, according to SteelOrbis’ data.

During the given week, HRC futures prices have moved up, exerting a positive impact on prices in spot market. Demand for HRC is anticipated to improve in the traditional peak season, which will bolster its prices in the Chinese domestic market. Market sentiments improved to a certain degree, which will positively affect HRC prices in the coming period.

As of August 27, HRC futures at Shanghai Futures Exchange are standing at RMB 3,329/mt ($451/mt), increasing by RMB 112/mt ($15.7/mt) or 3.5 percent since August 20, while up 1.90 percent compared to the previous trading day, August 26.

$1 = RMB 7.1249