Domestic hot-rolled coil prices in China inched higher on Thursday September 2, after two consecutive days of moderate losses, with market sentiment improved by positive production and inventory data.
Domestic
Eastern China (Shanghai): ۵,۶۷۰-۵,۶۹۰ yuan ($878-881) per tonne, up by 20 yuan per tonne
The most-traded HRC contract on the Shanghai Futures Exchange jumped to an intraday high of 5,618 yuan per tonne in the last trading hour before the closing bell on Thursday.
The gains in HRC futures came after a major local information provider released its weekly steel production and inventory data on Thursday afternoon.
The combined inventories of HRC, HR sheet and plate in China dropped 142,800 tonnes to 3.77 million tonnes in the week to September 2, while output of the products shrank by 30,500 tonnes to 3.15 million tonnes.
Aside from positive industry data, maintenance plans for September across a number of mills cemented expectations of a drop in production in the last quarter of the year, helping to boost market sentiment, a Shanghai-based analyst said.
Another positive factor was Beijing’s latest attempt to support economic growth. At a State Council meeting on Wednesday the Chinese authorities said that the money available to small firms will be increased by another 300 billion yuan to help cushion the stress from rising costs caused by high commodity prices, a rise in outstanding invoices, the impact of Covid-19 restrictions and adverse weather conditions.
Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۹۱۰٫۹۵ per tonne, up by $3.58 per tonne
Trading liquidity remained thin due to the less-than-competitive prices and lingering risks of potential export duties.
Trader indications of workable levels for SS400 HRC transactions remained stable at $890-940 per tonne fob, while Fastmarkets’ index was boosted by additional market participant estimates at about $920 per tonne fob.
Persistent concerns over the potential export duties has prompted mills to require buyers to shoulder all the risks. That, coupled with the less competitive prices compared to Indian and Russian cargoes, has lessened the appeal of Chinese material, while demand remains subdued by the pandemic, a Shanghai-based trader said.
Rising freight rates are another headwind against trading liquidity. Dry bulk freight rates from China to Brazil have soared to $170 per tonne for smaller cargoes, up from just over $80 per tonne in the second quarter, the trader added.
Vietnamese buyers were not actively in the spot markets due to the ongoing National Day holidays, which will last from four days starting from September 2, although existing offers from traders for Indian and Russian HRC position cargoes remained on the table. Those looking to purchase mill cargoes, however, have started to bid higher – at around $88-890 per tonne cfr Vietnam – a major stockist told Fastmarkets.
Market chatter
“Only products of special specifications can be sold now and it’s really difficult to sell common products [in the export market],” a second Shanghai-based trader said. “Quality now is the only advantage of Chinese material.”
Shanghai Futures Exchange
The most-traded January HRC contract ended at 5,571 yuan per tonne on Thursday, up by 79 yuan from Wednesday’s close.
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