China’s hot-rolled coil exporters kept their offers high on Wednesday August 12 despite a weakening of domestic prices.
*** Domestic
Eastern China (Shanghai): ۴,۰۴۰-۴,۰۵۰ yuan ($581-583) per tonne, down 10 yuan per tonne
Sellers in Shanghai lowered their offers slightly due to HRC futures having a weak start to the day. But trading activity picked up after HRC futures trended upward over the rest of the day.
A Shanghai-based trader said demand in the city remained largely stable, which was keeping prices supported.
But the arrival of cargoes from northern China is increasing inventory levels in Shanghai, which raises some uncertainty, she said.
Traders in Shanghai had in the past two weeks made large bookings of HRC from the northern region, China’s steelmaking hub. This was done in response to ex-works prices in the north being 150-200 yuan per tonne below spot market levels in Shanghai.
*** Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $508.38 per tonne, up $0.29 per tonne
Sources told Fastmarkets that it was hard to secure HRC from most major mills at prices below $510 per tonne fob during the day, similar to the situation on Tuesday.
This is due to mills having already secured a lot of orders in the domestic market. As such, they are not inclined to lower their export offers, particularly when the dollar is weakening.
*** buyers in Vietnam
The exchange rate was 6.9597 yuan to $1 on Wednesday, compared with 6.9649 yuan to $1 on Monday, according to China’s State Administration of Foreign Exchange.
A second Shanghai-based trader said that buyers in Vietnam had bought re-rolling-grade CHINA HRC from India at $500-505 per tonne cfr earlier this week. This is equivalent to around $490-495 per tonne fob China.
A Zhejiang-based trader said buyers in Pakistan also showed no interest in CHINA HRC at current prices.
But he said that another trader was short-selling small quantities of HRC to Pakistan at $520-525 per tonne cfr Pakistan this week. This is equivalent to about $500-505 per tonne fob China.
The trading source in Zhejiang said the trader was betting on mills to accept lower prices soon.
*** Market chatter
“I think it’s risky to sign deals below how much mills can accept now. Although domestic prices weakened, most major exporters have little interest in giving up their margins,” a third Shanghai-based trader said.
*** Shanghai Futures Exchange
The most-traded October HRC futures contract closed at 3,900 yuan per tonne on Wednesday, up by 28 yuan per tonne from Tuesday.
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