Chinese HRC export price trend lacks clarity, local market still gradually improving

Although the Chinese market has reopened in a rather positive manner after the recent holiday with local and futures HRC prices showing upward movement, no great surge in export prices has been reported so far, with only some upward bias heard from a few mills, while most Chinese suppliers have preferred to keep their export offers stable. At the same time, offer prices from a number of Chinese traders have moved down in some trade destinations like Vietnam due to slow demand, while other ex-China HRC offers, to the Middle East, have been showing upward movement.

More specifically, export offers for boron-added SS400 HRC given by most major Chinese mills have settled at $545-550/mt FOB, compared to $540-560/mt FOB last week. “Some offers could still be heard at $560/mt FOB, but most big mills are at $545-550/mt FOB levels for now, while smaller mills are offering SS400 HRC at $535-545/mt FOB, mainly the same as a week ago,” a market insider told SteelOrbis.

Meanwhile, offers from Chinese suppliers have been moving in different directions this week, depending on the destination. The tradable prices have been voiced at around $530-550/mt FOB, versus $530-545/mt FOB last week. The lower end of the range corresponds to ex-China SS400/Q235 HRC offers to Vietnam at $540-545/mt CFR, against $540-550/mt CFR last week, while Chinese SAE1006 HRC offers have been estimated in Vietnam at $555-565/mt CFR, against $565/mt CFR heard last week.

Furthermore, following at least 15,000 mt of ex-China SS400 HRC sold in the UAE at $570-575/mt CFR last week, this week indicative offers for ex-China HRC to the UAE have been reported at around $580-585/mt CFR. However, some sources said there have been offers at even higher levels, at $590-595/mt CFR UAE. “Offers have been rare in the Middle East this week, while the freight rate has increased by around $5-10/mt to up to $40/mt,” a Chinese trader told SteelOrbis. Prices for ex-China Q195 HRC in Turkey have been estimated at around $590/mt CFR, the same as at the end of last week, though some Chinese suppliers still claim there are some offers at $580/mt CFR.

In the meantime, average HRC prices in the Chinese domestic market have moved on an upward trend amid the improved demand from downstream users and better profitability on the HRC producers’ side. In particular, domestic HRC prices in China have settled at RMB 3,910-4,020/mt ($551-566/mt) ex-warehouse on May 7, with the average price level RMB 30/mt ($4.2/mt) higher compared to that recorded on April 30, according to SteelOrbis’ data.

During the given week, coke producers have started to implement the fifth round of price hikes, bolstering HRC prices from the cost side. At the same time, import iron ore prices have moved up, also exerting a positive impact on the HRC market. Besides, HRC futures prices have reached a two-month high in trading on May 7, positively affecting market sentiments. Moreover, several cities in China have loosened restriction policies on real estate purchases, which may stimulate transaction activities and bolster the demand for steel. It is expected that HRC prices in the Chinese domestic market may continue their upward trend in the coming week.

As of May 7, HRC futures at Shanghai Futures Exchange are standing at RMB 3,864/mt ($544/mt), increasing by RMB 48/mt ($6.8/mt) or 1.3 percent since April 30, while up 0.16 percent compared to the previous trading day, May 6.

$1 = RMB 7.1002