China's hot rolled coil prices were basically stable in the last week of 2023. The market is trying to find a stable direction for the opening of the new year, but fundamentals have not changed, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 4,050-4,070/tonne ($571-574/t), down CNY 20/t from the prior Friday. On the Shanghai Futures Exchange, the May 2024 contract for HRC gained CNY 18/t from Thursday but lost CNY 6/t on-week to CNY 4,116/t.

Production and consumption stabilised during the reporting period, and mills and traders just tried to reduce inventory pressure. Because of an eagerness for transactions before the New Year holiday, some merchants gave attractive discounts in the HRC market.

Plate, meanwhile, saw faster price declines than HRC due to worsening demand. Angang, China’s second-largest steel enterprise, also accelerated the delivery of material to southern China. In Wuxi on Friday afternoon, 20x2,000mm Q235B plate was traded at around CNY 4,070-4,090/t, down CNY 50/t on-week. 

The export market inevitably became quieter than the prior week. Some exporters still tried to offer low-grade HRC such as SS400, but few were heard quoting SAE1006 material. 

Before the yo-yoing spot pricing later last week, some Chinese SS400 HRC was quoted at $590/t cfr Gulf Cooperation Council, with domestic VAT payment circumvented to achieve lower export prices. Thereafter, export offers saw an increase of around $5/t, while on Friday, amid confusion over pricing, quotes were reduced at different rates depending on supplier.

For SAE 1006 HRC, the most competitive offers on Friday stood at above $590-595/t fob China, including some position cargoes targeting Jebel Ali. In terms of a rumoured deal done at $605-610/t cfr Vietnam, Chinese sources thought it was too high.

For those exports without full domestic VAT payment, a source says that exporters were slowing deliveries and even want to void earlier contracts as prices are now higher. “If they act according to the contract, they will lose a lot,” says the source. However, a Chinese exporter believes the slowdown in production at steel mills has reduced steel supply, which is the reason for the untimely delivery.

Kallanish assessed 2mm SAE 1006 HRC at $575-580/t fob China on 29 December, remaining unchanged on-week.