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Asian HRC prices unchanged as buyers put activity on hold

Tuesday, 20 October 2020

The Asian HRC market was stable on Oct. 20, with buyers yet to catch up with the hikes seen in Chinese mills’ offers amid the strength seen in the Yuan.

S&P Global Platts assessed SS400 HRC 3 mm thick at $512/mt FOB China, flat on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed at $518/mt, stable day on the day.

Chinese mills were offering SS400 HRC at $520-$540/mt FOB for December shipment, while most mills lifted offers by $5/mt on the week due to strengthened Chinese Yuan against the dollar. The central parity rate of yuan strengthened to 6.6930 against the dollar on Oct. 20, up about 1.3% compared with Oct. 9, when Chinese market resumed after the long holidays.

In addition, inquiries also picked up lately, with bidding level reaching $510/mt FOB from some buyers, including South Korea.

“There are some demand from overseas market. But buyers are hesitating to bid higher, as they remain concerned about declines in Chinese market in winter,” said a Chinese mill source.

“Buyers can accept slightly higher prices now, but the offer-bid spread still existing,” said a Chinese trader. The negotiation room for some mills, whose offers are competitive, are quite limited now, he said. The spot HRC price in northern China was equivalent to about $520/mt FOB, according to market sources.

Platts assessed SAE1006 HRC at $520/mt FOB China, stable on the day. On a CFR Southeast Asia basis, the same grade was assessed at $526/mt, flat on the day.

In Vietnam, buyers were yet to bid higher amid negotiation with local HRC producer Formosa Ha Tinh Steel, or FHS, for December shipment cargo. FHS is expected to complete its bookings for this round by Oct. 21, according to a mill source.

“Local buyers are in shortage of coils, but they are still reluctant to lift their bids,” said a Vietnamese mill source.

But the fact was there were no cheap materials available in the market, said a Chinese mill source. Russia-origin SAE big coils were heard offered at $515/mt CFR for January shipment.

In Pakistan, local buyers were heard able to accept Chinese SAE coils at $535/mt CFR. The price was equivalent to about $515/mt FOB, “but no materials with this price can be sold to them,” said a Chinese trader.

In Shanghai, the spot price of Q235 5.5 mm HRC was assessed at Yuan 3,900/mt ($584/mt) ex-stock including value-added tax, flat on the day. On the Shanghai Futures Exchange, the most active January contract closed at Yuan 3,745/mt, up Yuan 5 or 0.1% on the day.

Separately, Platts assessed SPCC grade 1 mm thick CRC at $602/mt FOB China on Oct. 20, up $9/mt week on week. The spread between the export price of CRC and commercial-grade HRC was at $90/mt.

Buying activity improved during the week, as South American buyers returned to the market and bid at $600/mt FOB, while some major Chinese mills raised offers to the $615/mt FOB level.

In the Shanghai dealers market, Platts assessed the same CRC grade at Yuan 4,750/mt ex-stock on Oct. 20, including value added tax, up Yuan 10/mt week on week.

-- Analyst Yuelin Dai

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