SteelMint’s Indian HRC (SAE 1006) export index stands at $1,044/tonne (t) FoB east-coast basis, down by $13/t against $1,057/t FoB week-on-week (w-o-w). However, major steel mills have held on to the HRC export offers and are in a wait- and watch mode.
Chinese domestic HRC prices are falling due to a sharp drop in futures contracts on the Shanghai Futures Exchange (SHFE). On 25 May’21, SHFE HRC futures contracts closed at RMB 5,281/t, ($824) down RMB 35/t against the closing on 24 May’21 which was around RMB 5,316 ($829/t). Due to volatile futures, the country’s HRC export offers dropped sharply.
This, in turn, led to a fall in HRC export offers from India since importing nations, especially Vietnam, showed resistance in buying the material at higher offers.
Rationale-
Seven indicative prices were considered as T2 inputs. The final price was an average of T2 inputs which stood at $1,044/t FoB. The CFR prices were converted to FoB equivalent by deducting freight costs from the buyer/seller.
Global HRC market highlights-
1. Chinese HRC export offers dips on govt intervention- The export offers have fallen steeply by $80/t this week against last week. The Chinese government intervened to warn commodity companies that if they were suspected of hoarding or driving up prices, there would be thorough investigations against them.
Also, recent rumours regarding the government’s plans to raise export tariffs on steel products, which includes HRC, led to pessimistic market sentiments and in turn resulted in a sharp fall in prices. Current export offers of HRC (SS400) stand at around $980-990/t FoB China contrasted against $1,060-1,070/t FoB a week back.
2. CIS HRC export offers move up further on strong demand- Supply crunch and strengthening demand have pushed up HRC export offers by $30-50/t this week against the previous week. The current week’s offers stand at $1,085-1,125/t FoB Black Sea compared to the previous week’s offer of $1,055-1,075/t FoB.
3. Imported HRC offers to Vietnam declines on global cues- The offers of imported HRCs have declined by $50/t w-o-w due to the downturn in global HRC prices and increased preference for domestic HRCs.
Offers for imported HRC-
i. Chinese mills are offering HRC at $1,030-1,040/t CFR basis. Previous offers were at around $1,080-1,090/t CFR basis.
ii. Position cargoes from India stood at around $1,070/t CFR. However, mills are still holding the offers at $1,100/t CFR seen a week ago.
iii. Japanese mills are offering at around $1,100/t CFR.
4. Pakistani importers book position cargoes for HRC- Last week, Pakistan-based importers were reported to have booked a few deals of HRCs (SAE,1006, rerolling grade) at around $930-950/t CFR basis for June shipments, a market source told SteelMint.
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