Imported HRC offers from China have dropped by $5/tonne (t) this week after rising over the past three weeks. Chinese offers had started ticking up on the back of improving demand and a rally in the futures market. However, the futures started declining at the start of the previous week and continued the descent towards the weekend after a brief period of increases, weighing on imported HRC offers w-o-w.
Current week’s imported HRC offers to Vietnam-
- China: Chinese mills offered HRCs (SAE1006) at $610-615/t CFR Vietnam, up from the previous week’s $615-620/t CFR.
- India: Indian mills have withdrawn all offers or indications from the Vietnamese market, and are likely to come up afresh post the New Year holidays.
- Japan: Offers from Japan were heard at around $650/t CFR, unchanged w-o-w.
- No offers were heard from Russia or South Korea.
What factors are influencing imported HRC prices?
1. Covid cases on a rise in China: News about the spreading of a fresh strain of Covid-19 in China just ahead of the Lunar New Year holidays has dampened sentiments in both the domestic and overseas markets. This has come in the aftermath of relaxation of lockdown norms in the country around 7 December. Also the Christmas and New Year holidays have led to a lull in overseas trade, sources informed.
2. Chinese steel futures remain volatile: Chinese steel futures have remained volatile since the beginning of the month. Furthermore, HRC May futures have underperformed since it touched the peak of RMB 4,131/t on 16 December. Chinese HRC (May 2023 contract) on SHFE settled at RMB 4,024/t as on 26 December, up by a mere RMB 5/t as against RMB 4,019/t on 19 December.
3. Vietnamese buyers stick to domestic procurement: Vietnamese buyers are currently fulfilling their requirements from the domestic market. Formosa and Hoa Phat had announced their sales prices for February and early-March around 10-15 days back. Buyers continue to find domestic prices lucrative against imported ones which also enjoy shorter delivery lead times. Participants are now concerned about the port logistics in China and across the globe after seeing the burst in Covid infection rates, informed a few sources.
Meanwhile, other exporting countries – Russia, South Korea and India – have not floated any firm offers or indications this week. This has reduced the competition, however, Indian mills are likely to come up with fresh offers in the first week of January, sources hinted.
Outlook
SHFE futures have remained largely stable today against last week’s close. The global HRC market is likely to remain less active this week amidst the ongoing holidays and there are less chances of steep price revisions.
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