Tradable ex-China HRC prices drop further by over $12/mt as mood worsens amid falls in local and futures prices

Although this week most big Chinese mills have made only slight downward corrections to their HRC export prices, negative sentiments have kept mounting in the market as local HRC prices have indicated significant decreases amid the continuing declines in HRC futures prices. Besides, sentiments among Chinese HRC traders, who were bearish during the previous week, have worsened as well, with the tradable level slumping by $12.5/mt on average over the past week.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $495-505/mt FOB, with a midpoint at $500/mt FOB, down by $2.5/mt week on week, while a number of large mills, such as Benxi Steel, who were offering their HRC at as high as $520/mt FOB last week, this week have cut their indicative prices to $515/mt FOB. Offers from smaller mills have been voiced at $490-495/mt FOB, while, according to sources, offers from Anfeng Steel have been voiced at $480/mt FOB.

At the same time, Chinese traders have kept cutting their offers given the sharp falls in futures prices for HRC, with the tradable level for ex-China SS400 HRC now at $475-490/mt FOB, versus $487-500/mt FOB last week. According to market insiders, several deals for ex-China Q235/SS400 HRC have been reported at $490/mt CFR Vietnam, down by $10-15/mt week on week, though a number of offers have already been heard at $485/mt CFR, which translates to around $470/mt FOB. “Sentiments have been affected by concerns over the Vietnamese anti-dumping investigation into Chinese and Indian HRC,” a market insider told SteelOrbis, adding, “For now, nobody can tell what the impact would be from the investigation and how it will end, but it will for sure affect business in the short and longer terms.”

Furthermore, offers for ex-China SS400 HRC in the Middle East have been estimated at $530-535/mt CFR UAE for September shipment, down by $5/mt week on week, while ex-China Q195 HRC offers in Turkey have been heard at $525-530/mt CFR, down by $10/mt over the past week.

Meanwhile, domestic HRC prices in China have decreased to RMB 3,510-3,600/mt ($492-505/mt) ex-warehouse on July 30, with the average price level RMB 134/mt ($19/mt) lower compared to that recorded on July 23, according to SteelOrbis’ data. 

During the given week, HRC futures prices have moved down sharply, negatively affecting the prices in the spot market. The increasing inventory levels have exerted a negative impact on HRC prices. Meanwhile, due to the imminent shift to the new standard for rebar, the steel market has come under downward pressure, weakening the support for market sentiments. At the same time, eastern China has been hit by a wave of hot weather again following Typhoon Gaemi, which will slacken demand in the short term. It is thought that HRC prices in the Chinese domestic market will continue their downtrend in the coming week.

As of July 30, HRC futures at Shanghai Futures Exchange are standing at RMB 3,448/mt ($484/mt), decreasing by RMB 135/mt ($19/mt) or 3.8 percent since July 23, while down 2.43 percent compared to the previous trading day, July 29. 

$1 = RMB 7.1364