Ex-China HRC prices fall further as futures still decline, customers seek more discounts

This week, Chinese hot rolled coil (HRC) suppliers including the big and smaller mills, as well as traders, have corrected their offers down for overseas buyers, given the lack of significant support from the Chinese domestic market and the continuous declines in HRC futures prices. At the same time, according to sources, ex-China prices have failed to reach the bottom so far, as most buyers have been holding back from concluding new purchases, bidding at lower levels instead.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $515-520/mt FOB, with the midpoint at $517.5/mt FOB, down by $7.5/mt week on week. At the same time, smaller mills have been offering their materials at $510-515/mt FOB, down by $5/mt over the past week, though talk about even lower offers at $505/mt FOB has started to appear in the market.

At the same time, the tradable prices for SS400 HRC have been estimated at around $505-515/mt FOB, against $508-515/mt FOB last week. Offers for ex-China Q235/SS400 HRC in Vietnam have been estimated at around $516-518/mt CFR, versus $525/mt CFR at the end of last week. At the same time, offers for ex-China SS400 without BIS certification in India have been voiced at around $540-545/mt CFR, while offers from suppliers with BIS certification have been reported at $558-560/mt CFR, which are considered “too high” for most Indian buyers.

Besides, Chinese suppliers have been offering their materials to the Middle East at $550-560/mt CFR, down by $10/mt on the lower end of the range week on week. According to sources, several deals for ex-China SS400 HRC have been signed through traders at $550-555/mt CFR, for 15,000 mt in Oman and for 27,000 mt in the UAE, for August shipment. Furthermore, Chinese Q195 HRC offers in Turkey have been reported at $550-555/mt CFR, though market insiders expect new deals with additional $5-10/mt discounts.

In the meantime, average HRC prices in the Chinese domestic market have indicated decreases amid declining HRC futures prices. In particular, domestic HRC prices in China are at RMB 3,720-3,810/mt ($522-534/mt) ex-warehouse on July 9, with the average price level RMB 50/mt ($7/mt) lower compared to that recorded on July 2, according to SteelOrbis’ data.

During the given week, bearish sentiments have prevailed among market players, exerting a negative impact on HRC prices. Meanwhile, HRC futures prices have edged down, weakening the support for prices in the spot market, while the outputs of HRC have increased, resulting in rising inventory levels.

As of July 9, HRC futures at Shanghai Futures Exchange are standing at RMB 3,711/mt ($520.5/mt), decreasing by RMB 46/mt ($6.5/mt) or 1.2 percent since July 2, while down 0.62 percent compared to the previous trading day, July 8.

$1 = RMB 7.131