Domestic hot-rolled coil prices in China increased further on Friday September 10, hitting their highest levels since the start of August, with the expectations of tougher curbs on production supporting market sentiment.
Eastern China (Shanghai): ۵,۸۵۰-۵,۹۲۰ yuan ($909-920) per tonne, up by 30-50 yuan per tonne
Northern China (Tangshan): weekly assessment: 5,780-5,830 yuan ($898-906) per tonne, up by 60-80 yuan per tonne
The most-traded HRC contract on the Shanghai Futures Exchange reached a high of 5,968 yuan per tonne in overnight trading, its highest level since August 2. It later pulled back and finished the day on Friday slightly lower than Thursday’s close.
With shrinking output suggesting that China is on track to prevent its crude steel output from exceeding that of 2020, optimism over production curbs further increased after local governments – including Jiangsu and Guangxi – stepped up their efforts to contain energy consumption, a Shanghai-based analyst said.
The expectations of extended production curbs were increased by local media reports that two industry guides on how China’s steel industry can achieve carbon emissions and high-quality development of the steel industry – the Steel Industry Carbon Emission Peak Implementation Plan and Guidelines on Promoting High-quality Development of the Steel Industry – are expected to be published by the end of this year.
But the steel demand outlook is still clouded by declines in property developments, manufacturing and exports; while high steel prices are likely to attract attention from the central authorities. These factors are all headwinds against steel price increases, the analyst added.
HRC prices in eastern China ended the week up by 90-120 yuan from last Friday’s 5,760-5,800 yuan per tonne.
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۹۳۸٫۵۵ per tonne, up by $6.18 per tonne
Extended gains in domestic prices prompted trading houses to hike their offers for SS400 HRC by $5-10 per tonne to more than $940 per tonne fob on Friday, while trading liquidity in the export market remained quiet.
Most traders and mills have stopped making offers, because the high prices, export tax uncertainty and growing freight rates are making Chinese material less appealing.
Vietnamese buyers remained wary of purchasing imported cargoes from China, with many market participants waiting for domestic producer Formosa Ha Tinh Steel Corp to list its November shipment and delivery cargoes.
Indian steel mills, meanwhile, were also keeping offers high at $930 per tonne cfr Vietnam, while a Kazakhstan steelmaker and a CIS-based steelmaker were also sounding out Vietnamese buyer interest.
“I am not issuing offers for Chinese HRC [because] the prices are too high,” a Shanghai-based trader said. “The export market has been dominated by Indian cargoes.”
Shanghai Futures Exchange
The most-traded January HRC contract ended at 5,858 yuan per tonne on Friday, down by 35 yuan from Thursday’s close.
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