Ex-China HRC prices slump again following downtrend locally

Although HRC futures prices in China have recovered slightly on Tuesday, August 20, the increase has not been sufficient to lift the mood of Chinese HRC suppliers. Thus, Chinese HRC suppliers, including both big and smaller mills, as well as a number of traders, have kept correcting their offers down for overseas buyers, given the lack of significant support from the domestic market. At the same time, despite the drop in prices, most traders have kept refraining from low bids and have preferred to stay in wait-and-see mode.

More specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $455-465/mt FOB, for October shipment, with a midpoint at $460/mt FOB, down by $30/mt since the beginning of last week, and down by $22.5/mt since Friday, August 16. Meanwhile, offers from smaller mills have been voiced at $450-455/mt FOB, versus $470-480/mt FOB last week. Such a sharp drop is explained by the decline in HRC futures prices, which, despite some recovery on Tuesday, have lost around $16.5/mt over the past week.

The tradable prices for ex-China HRC and Q195 has been estimated at $443-455/mt FOB, against $465-480/mt FOB at the beginning of last week and down by $2-5/mt since Friday. Offers for ex-China SS400/Q235 HRC in Vietnam have settled at $455/mt CFR, with a few deals reported to have been done at $453-455/mt CFR levels this week, down by $3-5/mt from the last deal price.

Furthermore, offers for ex-China Q195 HRC in Turkey have been estimated at $485-491/mt CFR, down by $28/mt week on week, with the lower end of the range corresponding to offers for 40,000-50,000 mt, while the higher end corresponds to smaller orders for 10,000 mt.

Offers for ex-China SS400 HRC in the Middle East have been estimated at $490/mt CFR, against $520/mt CFR last week.

In the meantime, average HRC prices in the Chinese domestic market have continued to indicate big decreases amid slack demand from downstream users and decreasing HRC futures prices. Specifically, domestic HRC prices in China have settled at RMB 3,130-3,240/mt ($438-454/mt) ex-warehouse on August 20, with the average price level RMB 190/mt ($27/mt) lower compared to that recorded on August 13, according to SteelOrbis’ data. 

During the given week, HRC futures prices have seen big declines, though finally indicating rises on August 20, signaling a possible improvement in sentiments among market players. Though demand for HRC from downstream users is still slack, the gap between supply and demand has eased to a certain degree amid producers’ reduced outputs. Market participants are still cautious as regards the future prospects for the HRC market. Following previous big declines, HRC prices may indicate a rebounding trend.

As of August 20, HRC futures at Shanghai Futures Exchange are standing at RMB 3,217/mt ($451/mt), decreasing by RMB 118/mt ($16.5/mt) or 3.5 percent since August 13, while up 1.97 percent compared to the previous trading day, August 19.

$1 = RMB 7.1325