Asian hot-rolled coil prices edged lower in the week to May 6 as buyers moved to the sidelines awaiting greater market clarity amid a bearish outlook.
The SAE1006 HRC grade was assessed down $9/mt week on week at $846/mt FOB China, and down $9/mt on the week at $835/mt CFR Southeast Asia.
The SS400 HRC grade of 3 mm thickness was assessed down $5/mt over the same period at $819/mt FOB China, and down $4/mt at $797/mt CFR Southeast Asia.
Activity was relatively muted following a short week, with China returning from holidays May 5. Chinese mills held back from releasing weekly offers and were expected to return with new offers next week with a better gauge of price trends. Following the increase over the holiday, spot prices and futures market fell sharply after China’s return as government announcements emphasizing COVID-19 containment weighed on sentiment.
“The Politburo meeting focused on COVID-19 prevention and control and not so much about economic stimulus anymore, the market is worried again,” a Shanghai-based trader said.
“In May the biggest impact on export trading is not any external factors, but internal factors; the COVID-19 situation is alleviating, logistics recovering, returning to work and restarting production,” a mill source in northern China said. “Once domestic trading erupts this will be the largest impact on exports; I don’t think export market will be able to keep up then.”
The spot price of Q235 5.5 mm HRC in Shanghai was assessed at Yuan 4,950/mt ($746.25/mt) ex-stock, including value added tax, down Yuan 110/mt on the day and down Yuan 10/mt week on week.
Currency exchange volatility added to market uncertainty. The Yuan weakened over the week, and market views were mixed on how the US Federal Reserve raising benchmark interest rates would affect the exchange rate and export prices.
“If the USD continues to strengthen, I expect most mills will increase export efforts,” a mill source in eastern China said.
“There is still much volatility in the [yuan-dollar] exchange rate, so most people are choosing to stay on the sidelines, few undertakings,” a mill source in northern China said.
Buying indications were largely absent as buyers continued to wait for prices to bottom out. In Vietnam, both domestic demand and the export market was weak. Chinese-origin SS400 coils were heard being offered as low as $800-$810 CFR Vietnam for June shipment late week, while bids remained scare.
“Now overseas buyers are just going to keep waiting again, too much volatility,” the northern China mill source said.
“Demand is not good even in domestic Vietnam market and also in export market like EU,” a Vietnam-based trader said. “Customers need to stay on the safe side now, no rush to buy.”
There was some market chatter regarding Russian HRC being offered in Vietnam by Chinese traders. A Vietnam-based trader said the lowest of such indicative offers was heard for Magnitogorsk Iron and Steel Works (MMK) SAE1006 big coils at around $700/mt CFR Vietnam for July shipment. “Shipment is long, payment problems also, so I do not care much about it,” the trader said.
“Seems before holiday a lot of deals for SAE, so now seems a wait for prices [from Formosa Ha Tinh, Hoa Phat],” a trader in Vietnam said.
