China’s hot-rolled coil producers raised their export offers on Tuesday July 28 despite a weakening of domestic prices.
***Domestic
- Eastern China (Shanghai): 3,910-3,930 yuan ($559-562) per tonne, widening downward by 10 yuan per tonne
Sellers in Shanghai kept their offers at 3,920-3,930 yuan per tonne in the morning, unchanged from Monday.
But falling futures in the afternoon sent buyers to the sidelines, which pushed prices down to 3,910-3,920 yuan per tonne.
A trader in Shanghai said most major mills were keeping their prices largely stable because their lead time had increased to 7-15 days, or even longer, after they secured a stream of orders in the past few weeks when HRC prices were strong.
But a few small HRC producers, mainly private companies, have started to cut prices after the futures market started to trend downward last Friday amid escalating tensions between China and the United States.
On Monday morning, China took over the premises of the US consulate in Chengdu after ordering its closure in response to the US shutting the Chinese mission in Houston.
***Export
- Fastmarkets’ steel hot-rolled coil index export, fob main port China: $479.88 per tonne, up $3.41 per tonne
A mill in northern China is offering October-delivery HRC at $495 per tonne fob this week, up by $5 per tonne from $490 per tonne fob from a week earlier when it was offering September-delivery HRC.
Other mills are also raising prices.
A Zhejiang-based trader told Fastmarkets that a mill in eastern China has set its lowest acceptable price at $485-490 per tonne fob this week, compared with $480-485 per tonne fob last week.
Mills have little interest to lower their export offers despite the weakening domestic market because the lowest amounts they are willing to sell at are already $5-10 per tonne below ex-works prices in the domestic market, a second Zhejiang-based trader said.
Mills are also not in a hurry to sell October-delivery HRC, having just filled up their order books for September-delivery cargoes, a Beijing-based trader said.
The first Zhejiang-based trader said Pakistani buyers were willing to buy HRC at around $500 per tonne cfr Pakistan, which is equivalent to around $480 per tonne fob China.
He does not expect such bids to lead to transactions after Chinese mills raised their offers.
***Market chatter
“I believe mills in the short term will keep prices high as long as their lead time is above 7-15 days. But if China’s financial markets weaken continuously, steel prices in the spot market will also fall. We have to wait several days to see where the prices are going for the longer term,” a second Shanghai-based trader said.
***Shanghai Futures Exchange
The most-traded October HRC futures contract closed at 3,749 yuan per tonne on Tuesday, up by 2 yuan per tonne from Monday.
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