Ex-China HRC prices slump further despite slight recovery in local and futures prices

Although average HRC prices in the Chinese domestic market have indicated some rises on Tuesday, September 10, amid a slight recovery in HRC futures prices, Chinese HRC exporters have been less positive so far, with both big and smaller mills decreasing their offers for overseas buyers since demand remains an issue in the main trade destinations. Though a number of market insiders believe that prices are unlikely to fall further, as September demand appears better, amid lower inventories and mills’ capacity utilization on the stable side.

More specifically, export offers for boron-added SS400 HRC by major Chinese mills have settled at $455-465/mt FOB, with a midpoint at $460/mt FOB, down by $7.5/mt week on week. At the same time, smaller mills have been offering their materials at $435-450/mt FOB, down by $15-20/mt over the past week.

However, the tradable prices for SS400 HRC have been estimated at $435-445/mt FOB, against $455-465/mt FOB, with the lower end of the range corresponding to ex-China Q235/SS400 HRC offers in Vietnam at $450/mt CFR, against deal prices at $445-450/mt CFR a few days ago and down by $15/mt week on week. Besides, offers for ex-China Q195 HRC in Pakistan have been estimated at $470-475/mt CFR, down by $15-20/mt week on week.

Furthermore, offers for ex-China Q195 and SS400 HRC in Turkey have been voiced at $488-495/mt CFR, down by $10-12/mt week on week, while offers in the Middle East have been estimated at $490-500/mt CFR, versus $500-510/mt CFR last week.

During the given week, HRC futures prices have moved on a downtrend, negatively affecting the domestic spot market. Demand for HRC has been slack, while inventories have been at relatively high levels, exerting a negative impact on market sentiments. However, HRC futures prices have indicated rises since September 9, possibly signaling a more optimistic attitude on the part of market players as regards the future prospects for the HRC market. It is expected that HRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.

Domestic HRC prices in China are at RMB 3,090-3,190/mt ($435-449/mt) ex-warehouse on September 10, with the average price level RMB 46/mt ($6.5/mt) lower compared to that recorded on September 3, but up by RMB 55/mt ($7.7/mt) since yesterday, according to SteelOrbis’ data.

As of September 10, HRC futures at Shanghai Futures Exchange are standing at RMB 3,136/mt ($441/mt), decreasing by RMB 78/mt ($11/mt) or 2.4 percent since September 3, while up 1.75 percent compared to the previous trading day, September 9.

$1 = RMB 7.1136