China's hot rolled coil prices have failed to draw support from the much-anticipated Plenary Session. Instead, they accelerated their decline to two-year lows last Friday. Export prices fell to their lowest level since October 2020, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235B HRC was traded at around CNY 3,600-3,620/tonne ($495-498/t), down CNY 70/t on-week. On the Shanghai Futures Exchange, the most-traded October 2024 contract for HRC lost CNY 8/t from Thursday and CNY 44/t on-week to CNY 3,665/t.

In Wuxi on Friday afternoon, 20x2,000mm Q235B plate prices were assessed at around CNY 3,630-3,650/t, down CNY 30/t from the prior assessment.

A drop in HRC production contributed to the decline in national inventories last week. However, weekly apparent consumption still edged down as demand remained sluggish and buyers chose to wait amid price declines.

Affected by this, spot traders are not willing to stock up and are mainly focused on reducing inventory. Therefore, the volume of steel being transferred from northern steel mills to markets in the south is relatively small.

On the export side, steel mills and traders were also reducing prices to maintain volumes, while the export situation was described as “acceptable” by many exporters last week.

The most competitive offers for SAE 1006 HRC dropped to around $505/t fob China last Friday, which was $10-15/t lower on-week. A few steel mills in eastern China whose sales had fallen short of expectations were more aggressive.

Earlier last week, a trading company sold a few thousand tonnes of 2mm+ Chinese SAE 1006 HRC at $519/t cfr Vietnam. “And buyers are now targeting $515-516/t cfr Vietnam,” an exporter commented on Friday.

Kallanish assessed 2mm SAE 1006 HRC at $505-515/t fob China on 19 July, down $10/t on-week.

China Custom’s increased surveillance on Chinese steel exports is causing delays in shipments and a lower volume of HRC being loaded onto ships. Negotiations are taking place for payment of VAT required by Chinese authorities for previous contracts concluded without VAT. Currently, all new offers and deal prices are reported to include VAT.