Ex-China HRC offer prices rise on further futures recovery, but trade remains limited

Although business activity has been extremely slow globally amid winter holidays, Chinese suppliers, both large mills and traders, have decided to go slightly higher this week following HRC prices growth in the domestic market amid the declining supply of HRC to the spot market and increasing HRC futures prices.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $585-595/mt FOB for mainly February shipment, with a midpoint at $590/mt FOB, up by $5/mt over the past week. “Despite slack trading activity globally mills are still bullish, and most traders have been following suit as well, though there are still discounts voiced by non-VAT traders,” a market insider told SteelOrbis.

The tradable level for ex-China SS400 HRC has been assessed at $565-580/mt FOB. Against $560-570/mt FOB last week. According to sources, the lower end of range corresponds to ex-China SS400 HRC offers in Vietnam at around $580-585/mt CFR, up by $5-10/mt week on week, while offers for Q195 HRC have been estimated at $575/mt CFR, against $565/mt CFR last week. Besides, Chinese SS400/Q195 HRC offers in Pakistan have been voiced at $590-600/mt CFR for end-February shipment, up by $10/mt over the past week. Meanwhile, offers in the Middle East and Turkey have been estimated at $600-610/mt CFR and $505-615/mt CFR, respectively, indicating slight increase over the past week as well.

In the SAE1006 HRC segment, offers from Chinese suppliers in Vietnam have increased to $600-610/mt CFR, versus $585-590/mt CFR at the beginning of last week. Meanwhile, ex-China SAE1006 HRC have been offered in Pakistan at around $620/mt CFR, standing in line with offers from Japan and Taiwan. Furthermore, while ex-China SAE1006 HRC in the Middle East have been assessed at above $620/mt CFR, a deal for around 35,000 mt of high-grade API HRC has been reported at around $715/mt CFR Saudi Arabia this week, according to sources.

Meanwhile, during the given week, several northern cities in China announced to halt production amid the environmental protection measures against the heavy pollution, bolstering HRC prices to a certain degree. At the same time, iron ore prices have seen further rises, providing solid support to HRC prices from cost side. Thus, domestic HRC prices in China have settled at RMB 4,090-4,350/mt ($576-613/mt) ex-warehouse on December 26, with the average price level RMB 77/mt ($11/mt) higher compared to that recorded on December 19, according to SteelOrbis’ data.

As of December 26, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,135/mt ($582/mt), increasing by RMB 105/mt ($14.8/mt) or up by 2.6 percent since December 19, though increasing by 0.27 percent compared to the previous trading day.

$1 = RMB 7.0965