Ex-China HRC prices relatively stable but with some upward bias amid improved mood locally

Although most Chinese HRC mills have continued to maintain their offers at unchanged levels this week, several producers as well as Chinese traders have decided to go a bit higher as increased local and futures prices for HRC have been providing support for the market mood. However, no significant revival in trade activity has been reported so far, as global demand is still not sufficient to support a rise in prices.

Specifically, export offers for boron-added SS400 HRC from large Chinese mills have settled at $530-550/mt FOB, with a midpoint at $540/mt FOB, up by $7.5/mt week on week. However, according to sources, only a few producers have decided to go higher this week, while most have maintained their offers unchanged at $530-540/mt FOB, the same as last week, while smaller mills have kept offering at $525-535/mt FOB levels.

The tradable levels for ex-China SS400 HRC have been estimated at $520-530/mt FOB, against $515-530/mt FOB last week. Offers for Chinese Q235/SS400 HRC in Vietnam have been voiced at $530/mt CFR and slightly above, compared to $525/mt CFR at the beginning of last week. Meanwhile, offers for ex-China Q196 HRC in Pakistan have been heard at $530/mt CFR, while offers for SS400 have been heard at around $535-540/mt CFR, up by $5/mt on the higher end of the range week on week.

At the same time, most offers for ex-China SS400 from traders in the Middle East have been maintained at $550-555/mt CFR UAE, the same as last week, and at around $570/mt CFR UAE from a number of mills. Furthermore, ex-China HRC offers in South America have been estimated at $590-610/mt CFR, mainly the same as last week.

In the meantime, average HRC prices in the Chinese domestic market have seen an uptrend amid the improved demand and increasing HRC futures prices. In particular, domestic HRC prices in China have settled at RMB 3,860-3,950/mt ($542-548/mt) ex-warehouse on April 16, with the average price level RMB 40/mt ($5.6/mt) higher compared to that recorded on April 9, according to SteelOrbis’ data.

During the given week, HRC prices in the Chinese domestic market have moved up as demand from downstream users has improved, resulting in declining inventory levels, which have exerted a positive impact on the market. However, demand is still in the recovery phase, while the rate of recovery of demand will affect HRC prices in the coming period. At the same time, the recent increasing trend of import iron ore prices will continue to bolster HRC prices from the cost side. However, major Chinese steelmaker Baosteel has decided to cut its local base prices by RMB 100/mt ($14/mt) for hot rolled coil (HRC) by $14/mt for May, which may weaken market sentiments. 

As of April 16, HRC futures at Shanghai Futures Exchange are standing at RMB 3,777/mt ($526/mt), increasing by RMB 11/mt ($1.5/mt) or 0.3 percent since April 9, while up 0.05 percent compared to the previous trading day, April 15.

$1 = RMB 7.1028