Hot-rolled coil prices in China’s domestic market fell slightly on Tuesday June 8, with the futures prices extending their decline in the morning before clawing back some losses in the afternoon.
Domestic
Eastern China (Shanghai): 5,450-5,520 yuan ($853-864) per tonne, widening by 10-50 yuan per tonne.
The most-traded HRC futures contract on the Shanghai Futures Exchange touched a one-week low of 5,197 yuan per tonne on Tuesday before closing slightly above Monday’s close.
Inventories of HRC in China stood at 1.58 million tonnes as of the end of May. That is 320,000 tonnes lower than the same period last year but 50,000 tonnes higher than mid-April, which suggests weakening demand amid the forthcoming seasonal lull, data from the China Iron & Steel Association shows.
Despite stabilizing prices, rising inventory levels will place downward pressure on HRC prices, a Hangzhou-based trader said.
A second trader, however, said that “prices are unlikely to drop for the lull season,” and it is “the periodic panic” which has caused the recent fall in prices.
Trading activity in the domestic market recovered slightly on Tuesday.
Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $902.89 per tonne, down by $0.27 per tonne.
The export market remained muted due to volatile domestic prices. Steel mills and trading houses kept their offers unchanged, while buyers overseas stayed out of the market.
An eastern mill held its offer stable at $960 per tonne fob China, and concluded some deals at $950-960 per tonne fob in the week to June 8.
A second mill in the eastern region cut its offer by $60 per tonne from last week, to $940 per tonne fob.
Some trading houses continue to believe $900 per tonne to be a reasonable price for the current market situation, sources said.
Demand is improving from Southeast Asia and South America, sources said.
Market chatter
“Falling domestic prices and the uncertainty surrounding the export tax policy kept overseas buyers from making purchases,” a Hangzhou-based trader said.
Most Chinese mills require buyers to shoulder the burden of the export tax in their contracts, if it is imposed after the sales contract is signed.
Shanghai Futures Exchange
The most-traded October HRC contract closed at 5,288 yuan per tonne on Tuesday, up by 36 yuan or 0.69% from Monday’s close.
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