Spot prices for hot-rolled coil in China fell further on Wednesday October 27, with the coal-led broad-based decline in the futures markets resuming following the state planner’s latest attempt at cooling coal prices.
Eastern China (Shanghai): ۵,۳۹۰-۵,۴۸۰ yuan ($843-857) per tonne, down by 70-110 yuan per tonne
Spot prices covered a wide range on Wednesday, as the most-traded HRC contract on the Shanghai Futures Exchange fell sharply to a five-month low of 5,015 yuan per tonne during the day. The intraday low was the lowest level since the contract touched 4,951 yuan per tonne on May 27, having dipped from a record high of 6,727 yuan per tonne on May 12.
Sharp losses in HRC spot and futures prices came as the most-active thermal coal contract on the Zhengzhou Commodity Exchange along with coke and coking coal contracts on the Dalian Commodity Exchange, suspended trading after hitting their daily downward trading limits again.
China’s National Development & Reform Commission (NDRC) said on Tuesday that it was considering introducing a mechanism to guide coal prices in “a reasonable range” over the long run. The pricing mechanism will be established on a benchmark price and a floating range. Costs, reasonable margins and market dynamics will all be taken into account, it added.
The country’s National Bureau of Statistics (NBS) reported on Wednesday morning that industrial profits in China had risen by 44.7% year on year in January-September, slowing from 49.5% in January-August. Zhu Hong, an NBS official, said that “high commodity prices” and “supply chain issues” remained strong headwinds against the recovery in company profits.
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۸۷۸٫۴۲ per tonne, down by $11.58 per tonne
Mainstream offers for SS400 HRC from trading houses and mills have fallen below $900 per tonne fob China, following the sharp decline in domestic prices.
Traders indicated that the workable level for transactions had reached $880 per tonne fob China.
Trading liquidity for Chinese HRC exports, meanwhile, picked up slightly in the wake of price cuts, traders said.
Offers for HRC from India, Brazil and elsewhere have increased to more than $900 per tonne cfr Vietnam, market sources told Fastmarkets on Wednesday.
And rumours of a 20,000-tonne HRC cargo being sold to Vietnam at $850 per tonne cfr this week could not be verified with the parties involved.
“The high domestic prices in India are boosting offers from steelmakers there, it’s more profitable to sell to domestic buyers,” a Vietnamese trader told Fastmarkets.
Market participants are watching keenly to see whether Chinese HRC will be offered in the spot market given the sharp downward adjustments in domestic prices.
“The strong intervention in coal prices from the central authorities has given a big hit to market morale. We see further room for downside in steel futures prices in the short run,” a Shanghai-based industry analyst said.
Shanghai Futures Exchange
The most-traded January HRC contract ended at 5,032 yuan per tonne on Wednesday, down by 204 yuan from Tuesday’s close.
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