Chinese HRC exporters secure more deals amid revived buying interest globally

More HRC export trade activity has been reported from China during the past weeks as the buying interest of many customers globally has intensified. At the same time, most deals have been reported at discounted prices from non-VAT traders, while offers from big Chinese mills have remained relatively stable over the past week. Furthermore, most sources believe that big orders at low prices for non-VAT HRC will be limited now, and so new deal prices are likely to see a slight upward correction in the next round of bookings.

At present, export offers for boron-added SS400 from most large Chinese mills have settled at $585-600/mt FOB for March shipment, with the midpoint at $592.5/mt, down by $2.5/mt over the past week. “Most big mills have maintained their offers unchanged over the past week, but the higher end of the range is not considered workable and firm offers are actually estimated at around $580-585/mt FOB,” a market insider told SteelOrbis.

Meanwhile, the tradable level for ex-China SS400 HRC has settled at around $565/mt FOB, against $565-570/mt FOB last week based on offers from smaller mills and traders. According to sources, numerous deals for ex-China materials are reported globally, especially through mainly non-VAT traders with additional discounts. Particularly, at least 40,000 mt in total of ex-China Q195/SS400 HRC have been sold in Turkey at $600/mt CFR, which translates to around $565/mt FOB. In addition, as SteelOrbis reported earlier, last week two 20,000 mt HRC cargoes for pipe production were booked to Turkey at around $625/mt CFR. The higher price is explained by the difference in the material’s quality and because it was traded by a first-tier mill, while the materials at $600/mt CFR were sold through non-VAT traders.  “Big orders at low prices without tax are now limited. Few traders dare to do that and have problems with invoices. So, for February and even earlier, all volumes have been taken and we doubt there will be more deals at such low prices,” a Chinese trader told SteelOrbis.

Meanwhile, Chinese sellers have been also more active in SAE1006 HRC sales to Asia and the Middle East. More specifically, a deal for 30,000 mt of ex-China SAE1006 was reported in Vietnam at $618/mt CFR for March shipment last week, followed by more deals for smaller tonnages at $610/mt CFR and $613/mt CFR, respectively. Furthermore, buyers in Pakistan have reported at least 15,000 mt of ex-China SAE1006 HRC were booked from a first-tier mill at $610-615/mt CFR, while around 5,000-10,000 mt are reported to have been bought at $600/mt CFR from a second-tier Chinese mill.

Furthermore, more deals have been reported for ex-China HRC in the Middle East, with around 45,000 mt of SAE1006 HRC reported to have been booked at $600-605/mt CFR through a non-VAT trader, while another batch for SS400/Q195 HRC has been ordered at around $590/mt CFR UAE. At the same time, most offers for ex-China SAE1006 HRC have been estimated at around $620/mt CFR and slightly lower, according to sources. 

In the meantime, domestic HRC prices in China have settled at RMB 4,070-4,260/mt ($572-599/mt) ex-warehouse on January 16, with the average price level RMB 20/mt ($2.8/mt) lower compared to that recorded on January 9, according to SteelOrbis’ data.

During the given week, import iron ore prices edged down, weakening the support for HRC prices. However, HRC producers’ offer prices have been at relatively high levels, while traders have been unwilling to build up stocks for the winter season at present. Both demand and supply has been weak in the HRC market, which will result in increasing inventory levels.

As of January 16, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,029/mt ($567/mt), decreasing by RMB 20/mt ($2.8/mt) or down by 0.5 percent since January 9, though increasing by 0.22 percent compared to the previous trading day (January 15). 

$1 = RMB 7.1134