China HRC prices fell in both the domestic and export markets on Wednesday September 16 amid losses in financial markets overall.
*** Domestic
Eastern China (Shanghai): 3,850-3,880 yuan ($568-572) yuan per tonne, down 50-70 yuan per tonne
Several sources told Fastmarkets that sellers in Shanghai cut offers significantly following losses on the futures market on Wednesday.
That was amid financial market losses overall, they said. The Shanghai Composite Index fell 0.36% on Wednesday to 3,283.92 points, while the most traded January HRC futures contract lost 41 yuan per tonne on the same day. But trading activity in the HRC spot market was stronger than on Tuesday, a Shanghai-based trader said.
A source at a state-owned bank told Fastmarkets that commodity prices overall could further weaken, because he does not expect the Chinese government to ease monetary policy as significantly as it did earlier this year. He said he believes China will slow down the injection of money into the financial market since the real economy “has posted better-than-expected recovery, which needs less support, such as fundraising.”
China’s growth of industrial production, fixed asset investment and retail sales quickened to 5.6%, 7.6% and 0.5% respectively in August on a year-on-year basis, all of which are above market expectations, Japanese securities trading house Nomura said in a report on Wednesday.
*** Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $516.57 per tonne, down $2.69 per tonne
Most traders quoted $515-520 fob as the lowest Chinese mills would accept fob if overseas buyers place orders, widening downward from $520 per tonne fob earlier this week. The lower minimal acceptable level was attributed to producers needing more deals in the overseas market to bolster profit after domestic prices weakened, a Zhejiang-based trader said.
Many Chinese traders are in short-selling positions after the domestic market started its downturn. A trader based in Jiangsu province heard some traders have signed HRC deals to Vietnam at around $515 per tonne cfr Vietnam for November/December delivery. That is equivalent to around $505 per tonne fob China. But a Vietnam-based trader said the market is lacking HRC with October delivery dates, rather than November/December delivery.
*** Market chatter
“I know Vietnam is in urgent need of HRC with October delivery, but such goods need to have been booked around one month ago. At that time few of us [traders] thought prices would fall so fast and significantly,” the Zhejiang-based trader said.
*** Shanghai Futures Exchange
The most-traded January HRC futures contract closed at 3,689 yuan per tonne on Wednesday, down by 41 yuan per tonne from Tuesday.
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