China’s domestic hot-rolled coil prices dipped on Monday July 27, but sources are still expecting export prices to remain stable due to mills not being in any rush to sell.
***Domestic
Eastern China (Shanghai): ۳,۹۲۰-۳,۹۳۰ yuan ($559-560) per tonne, down 10-20 yuan per tonne
Domestic HRC prices fell during the day amid falling futures.
Most market participants believe China’s ferrous futures market will continue to weaken in the next few days amid escalating tensions between the country and the United States.
On Monday morning, Chinese authorities took over the premises of the US consulate in Chengdu, after ordering its closure last week in response to a similar move that the US imposed on China’s diplomatic mission in Houston.
Several Shanghai-based traders told Fastmarkets that trading was thin in the spot market during the day, with buyers refraining from placing orders on expectations of further price decreases.
Prices in the northern region fell even more rapidly. A trader in Tianjin said ex-works prices for HRC in Tangshan, China’s steelmaking hub, fell by 30-40 yuan per tonne on Monday to around 3,750 yuan per tonne.
Prices in Shanghai were relatively more stable in comparison because of that region’s low inventory levels, sources said.
***Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۴۷۶٫۴۷ per tonne, up $0.14 per tonne
China’s HRC export market was quiet on Monday, with participants waiting for mills to update their offers on Tuesday.
Most major mills offered their products at $490-500 per tonne fob last week, although traders believed $475-480 per tonne fob was an achievable range.
Most traders expect mills to keep their export offers steady this week despite the domestic prices decline. This is because most mills have already secured a sufficient number of orders in the past few weeks when domestic prices were strong.
Furthermore, export offers are already around $10 per tonne below ex-works prices in the domestic market, a Zhejiang-based trader said.
Traders with position cargoes secured several orders at the weekend.
A second Zhejiang-based trader said buyers in Pakistan had signed several deals involving small tonnages of HRC with such traders at $503-508 per tonne cfr Pakistan. This is equivalent to around $483-488 per tonne fob China.
He expects these buyers to bid lower in the next few days amid China’s domestic price decline.
Importers in China took a wait-and-see approach during the day amid weakening prices.
***Market chatter
“I believe mills would rather not sell in the export market than cut their export offers this week. They are not in a rush to sell at the end of the month anyway,” a Shanghai-based trader said.
***Shanghai Futures Exchange
The most-traded October HRC futures contract closed at 3,747 yuan per tonne on Monday, down by 20 yuan per tonne from Friday.
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