Chinese HRC exporters try to push volumes at discounts globally

Although average HRC prices in the Chinese domestic market have indicated a slight uptrend given the small recovery in HRC futures prices, ex-China HRC offers from both big and small mills, as well as from traders, have indicated a slight downward correction over the past week. This move is mainly explained by the rather moderate demand overseas, while most buyers have been ready to make new bookings only with additional discounts.

More specifically, export offers for boron-added SS400 from most large Chinese mills have settled at $580-590/mt FOB, for March shipment mainly, with the midpoint at $585/mt FOB, down by $7.5/mt over the past week. According to sources, although official offers from some mills are still voiced at $600/mt FOB, nobody takes this level seriously. “Benxi Steel, which is officially offering its HRC at $600/mt FOB, has sold big volumes, closing its order books totally at $580-585/mt FOB, mainly to distant overseas markets,” a Chinese trader told SteelOrbis.

Meanwhile, offers for ex-China SS400 HRC from smaller mills and traders have been heard at $550-560/mt FOB, versus $560-565/mt FOB last week. Ex-China SS400 offers in Vietnam have been rare this week, with the indicative levels estimated at around $565-570/mt CFR, against $570/mt CFR last week. Meanwhile, while the market has been quiet in Vietnam, ex-China offers for SAE1006 HRC in Pakistan have been voiced at $580-590/mt CFR from second-tier mills through traders, down by $10/mt week on week, while offers from first-tier mills have been heard at $620/mt CFR, mainly the same as last week.

Furthermore, Chinese suppliers have continued to focus on the Middle Eastern market, with a deal for around 8,000 mt for SS400 HRC from a second-tier mill reported to have been signed at $588/mt CFR UAE, while most offers have been estimated at around $590-600/mt CFR, the same as last week. At the same time, offers for ex-China SAE1006 HRC have remained at $620/mt CFR in the UAE, with only a few small deals reported at $615/mt CFR for late February shipment.

In the meantime, domestic HRC prices in China have settled at RMB 4,080-4,280/mt ($574-602/mt) ex-warehouse on January 23, with the average price level RMB 17/mt ($2.4/mt) higher compared to that recorded on January 16, according to SteelOrbis’ data. According to sources, during the given week, import iron ore prices have moved on an upward trend, providing solid support for HRC prices from the cost side. However, demand for HRC has gradually slackened, which has limited the rising pace of prices. Meanwhile, as the Chinese New Year holiday (February 9-16) is drawing closer, some market players already plan to leave the market, which will affect HRC market and result in a stable trend of prices.

As of January 23, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,049/mt ($569.5/mt), increasing by RMB 20/mt ($2.8/mt) or up by 0.5 percent since January 16, though increasing by only 0.42 percent compared to the previous trading day (January 22).

$1 = RMB 7.1117