A softening dollar led china HRC producers to their export offers flat on Tuesday September 15 despite a weakening domestic market.
*** Domestic
Eastern China (Shanghai): ۳,۹۲۰-۳,۹۳۰ yuan ($575-576) yuan per tonne, narrowing downward by 10 yuan per tonne
A Shanghai-based trader said trading activity had thinned during the day from Monday following losses in the futures market.
Sellers were looking to sell at 3,940 yuan per tonne in the morning, but the thin trading dragged prices down to 3,920-3,930 yuan per tonne later in the day.
A second Shanghai-based trader said HRC prices could weaken further, especially if HRC futures continued to drop.
He believes the recent strength in the futures market had been due to China’s monetary easing policies, which grew cash flow in the financial markets.
But with these efforts being scaled back, it is only a matter of time before HRC prices weaken, he said.
*** Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۵۱۹٫۲۶ per tonne, up $0.13 per tonne
Despite the weakening domestic market, most major mills rolled over their export offers this week.
A major mill in northern China is offering SS400 HRC at $535 per tonne fob, unchanged from last week.
Another major steelmaker, in eastern China, also rolled over its offer of $530 per tonne fob for this week.
Several sources told Fastmarkets that these were due to the weakening dollar.
The exchange rate was 6.8222 yuan to $1 on Tuesday, compared with 6.9405 yuan to $1 a month earlier, according to China’s State Administration of Foreign Exchange.
But some traders were selling short amid the weakening of domestic prices. A Vietnam-based trader said some Chinese traders had already concluded deals at around $520 per tonne cfr Vietnam with buyers there since late last week.
That is equivalent to around $510 per tonne fob China.
*** Market chatter
“[Short-selling] traders are betting on buying HRC at lower prices in the next few weeks, having entered into transactions to supply November/December-delivery cargoes [to Vietnam]. Currently, they cannot get low prices from us major mills because the dollar is depreciating,” a source at a second mill in eastern China said.
*** Shanghai Futures Exchange for china HRC
The most-traded January HRC futures contract closed at 3,730 yuan per tonne on Tuesday, down by 56 yuan per tonne from Monday.
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