Asian flat steel prices rise on stronger Chinese offers

The Asia hot rolled coil market increased July 20 on an FOB China basis, in line with higher mills’ offers amid expectations of rising prices and reduced allocations for export due to output cuts in the second half of the year.

S&P Global Platts assessed SS400 HRC 3 mm thick at $927/mt FOB China, up $15/mt on the day. Platts assessed SAE1006 HRC at $955/mt FOB China, up $15/mt on the day.

Some export mills in eastern China raised offers to $1,000/mt FOB, after a suspension in quoting in the previous week, while some mills in northern China offered $1,030-$1,040/mt FOB.

Some major mill’s export allocations are tight, and they mainly exported to long-term buyers, market sources said. For SAE HRC, demand is slow due to competitive offers from Indian mills, but some buyers need to book SS400 from China and they had to catch up to chase the rising offers, said a Chinese trader.

Demand from Asia is overall weak, due to the slow season and a new COVID outbreak, although the costs equivalent to the domestic market for SS400 HRC has been about $950/mt FOB, said a second trader.

Meanwhile, there are rising market chatters about China that it might apply export duty on HRC and remove rebate on CRC and HDG since September. “They are market talks in different versions,” said a Chinese mill source. But sellers would ship the cargoes to the bonded warehouses after signing the contracts, said another trader.

In Vietnam, Formosa Ha Tinh Steel has started negotiated with local customers for sales for September shipment. With a reduction of $60/mt month on month, the mill was heard offering about $965-$975/mt CFR for SS400 and SAE HRC, according to local sources.

Meanwhile, Indian mills’ prices for SAE HRC remained competitive. One Indian mill was heard concluded deal to Vietnam at $930/mt CFR for SAE HRC and sold to South Korean buyers at a similar level. It’s also reported that one major Chinese mill had sold HRC at $1,000/mt CFR level in the previous week.

In Shanghai, the spot price of Q235 5.5 mm HRC was assessed at Yuan 5,860/mt ex-stock, including value added tax, down Yuan 40/mt day on day.

In the Shanghai Futures Exchange, the most actively traded October contract closed at Yuan 5,968/mt, up Yuan 42/mt, or 0.7%, over the same period.

Meanwhile, Platts assessed SPCC grade 1 mm thick CRC at $937/mt FOB China on July 20, up $14/mt on the week. Mills lifted CRC offers further in line with HRC and tradable level also increased.

In the Shanghai dealers’ market, Platts assessed the same CRC grade at Yuan 6,400/mt ex-stock, including VAT, up Yuan 100/mt on the week.

— Analyst Yuelin Dai