Ex-China HRC prices decline, but trend may reverse amid futures rise

Although HRC futures prices in China have shown some rebound on Tuesday, April 2, after the declines seen last week, Chinese HRC exporters, including both mills and traders, have remained rather negative in terms of prices at least for now as demand has remained sluggish in the main trade destinations. According to sources, only some small rebounds in new offers have been heard from non-VAT traders in Vietnam, who were the most aggressive in their last deals in recent days.

More specifically, export offers for boron-added SS400 HRC from most large Chinese mills have settled at $520-545/mt FOB, against $530-560/mt FOB last week, though offers at lower levels have been heard from some smaller mills as well, at around $510-515/mt FOB in particular. “We heard Shagang is offering at $525/mt FOB, while Shangang Rizhao is offering at around $545/mt FOB, down by $15/mt week on week. Official offers from Benxi have been heard at $560/mt FOB, but at $580/mt CFR UAE, which means around $545-550/mt FOB,” a market insider told SteelOrbis.

As for the tradable level for ex-China SS400, it has settled at $510-525/mt FOB, down by $10/mt on the higher end of the range week on week. The lower end of the range represents the level seen in offers to Vietnam by early this week at $520/mt CFR, the same as at the beginning of last week, but higher by $10/mt than prices in the latest deals done at the end of last week and during the weekend.

Meanwhile, lower ex-China SS400 HRC offers have been voiced in the Middle East, with offers from traders heard at $550-555/mt CFR UAE, down by $5/mt week on week, while, according to sources, talk about lower offers at $540-545/mt CFR UAE has also been circulating in the market. Meanwhile, offers from first-tier Chinese mills have been heard in the UAE at around $570-580/mt CFR levels, mainly the same as last week. Furthermore, ex-China Q195/SS400 HRC offers from non-VAT traders have been voiced in Turkey at around $540-550/mt CFR, against $560/mt CFR last week.

During the given week, HRC prices in the Chinese domestic market moved down first while indicated a rebounding trend later. In particular, domestic HRC prices in China are at RMB 3,850-3,890/mt ($542-548/mt) ex-warehouse on April 2, with the average price level RMB 57/mt ($8/mt) lower compared to that recorded on March 26, but up by RMB 100/mt ($13.8/mt) since yesterday, according to SteelOrbis’ data. 

HRC futures prices have increased since April 1 following the news about the Department of the Raw Material Industry in China’s Ministry of Industry and Information Technology (MIIT), planning to hold a meeting with several major steelmakers to get a comprehensive understanding of the production and operation of the steel industry. Meanwhile, China’s National Development and Reform Commission (NDRC) has held a meeting with major enterprises, aiming to promote the implementation of policies to drive more equipment renewal, which will boost confidence in the steel market and expand the release of speculative demand. Moreover, more cities have issued policies to stabilize the real estate industry, which will likely exert a positive impact on the demand for steel and on market sentiments.

As of April 2, HRC futures at Shanghai Futures Exchange are standing at RMB 3,688/mt ($526/mt), decreasing by RMB 47/mt ($6.6/mt) or 1.26 percent since March 26, while up 2.62 percent compared to the previous trading day, April 1. 

$1 = RMB 7.0957