Buying activity in the Asian hot-rolled coil market remained quiet and sentiment bearish Sept. 10, as buy-side sources indicate lower buying interest waiting for a clearer market trend to emerge, amid fall in Chinese domestic and futures prices.
S&P Global Platts assessed SS400 HRC 3 mm thick at $515/mt FOB China, down $2/mt on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed down $3/mt at $521/mt on the day.
Market participants Platts spoke with were seen assessing the consistent fall in futures prices since Sept. 4 that is impacting spot prices. While a few sources believed that the futures fall had less to do with demand-supply fundamentals, others believed price uptick in Chinese domestic prices for September did not match expectations leading to bearish sentiment on the futures market.
In Shanghai, the spot price of Q235 5.5 mm HRC was assessed at Yuan 3,900/mt ($570.16/mt) ex-stock, including value-added tax on Sept. 10, down Yuan 45/mt on the day, falling by Yuan 160/mt since Sept 2. On the Shanghai Futures Exchange, the most actively traded January 2021 contract closed at Yuan 3,732/mt, down Yuan 20/mt on the day.
There was lack of consensus on the direction Chinese market could take in the near future. Given the strong raw material prices, it was unlikely that domestic prices could fall drastically, a few sources said.
"Domestic demand in China might come down because of seasonal factors; stimulus wearing off; other countries increasing production so demand for steel intensive goods going down and increasing trade restrictions," a Thailand-based mill source said. "So Q4 might see price going down but if supported by raw material too."
"I feel next week [the market] would rebound," a northern China-based mill source said. "Vietnam's demand is pretty good in September, Indian cargoes are high by now so I feel deal price would fluctuate."
"Export price is not adjusted officially, but mills are giving hints to exporters to try bidding at a lower price," a Shanghai-based trader said. "You may see Chinese traders are more aggressive to offer lower prices in Vietnam trying to collect orders.
Platts assessed SAE1006 HRC at $527/mt FOB China, unchanged on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed at $534/mt, down $1/mt over the same period.
In Vietnam, a bearish market sentiment prevailed, with a few buyers withdrawing from the market even though Chinese material continued being more competitive than other origins.
"Demand in China is steady and there is no reason, as per me, for Chinese mills to collect orders in Vietnam," a Japanese mill source said. "Last two-three years especially, supply has been tight from November – March owing to winter production cuts."
Meanwhile, offers for Chinese SAE1006 material stood at $540/mt CFR Vietnam for thicker 2.5 mm and up material for November shipment, even as bids remained lower at $530-$535/mt.
"Definitely seeing a fall in the overall market, although Vietnam had seen purchase at $540/mt CFR and above last week, we don’t think this price will be able to maintain," an eastern China-based mill source said. "Customers are all waiting for price to fall first before making purchase."
"I think Malaysia market will depend on October’s budget and loan moratorium," a Malaysia-based mill source said.
-- Ashima Tyagi
