Highlights

  • The FOB Tianjin HRC benchmark fell US$6 on the week to US$485/t and held there through 10-11 Nov.
  • Chinese mills under pressure to win new orders are trimming offers while overseas buyers hold out for lower prices and trade barriers spread.
  • Expect a grind sideways-to-lower in the US$479-486/t deal band unless a domestic futures rebound lifts offers.

China's export coil price is edging lower week by week as mills scramble for orders and buyers abroad refuse to chase.

What happened

Chinese hot-rolled coil for export has drifted lower again. The SS400 3mm benchmark, FOB Tianjin, was assessed at US$485/t on 6 November, down US$6 on the week, and it was still at that level on 10 November. The daily export table for 11 November showed no change.

The slide is slow but persistent. The same index stood at US$493/t on 23 October and US$491/t on 30 October, so it has shed US$8, or about 1.6%, in a fortnight. A separate China HRC export index was also down 0.8% week on week in early November.

Real Business is happening just below the headline number. Export HRC deals were mostly done at US$479-486/t on 11 November, little changed from the previous day, with sentiment only moderate and no clear pick-up in order books. Private mills' tradable offers were near US$475/t earlier in the month.

Why it happened

The core problem is that Chinese mills have more coil than buyers. Mills and traders cut export offers because of "persistent pressure on domestic mills to secure new orders". At home, the national Q235B Spot Price was 3,220 yuan/t on 30 October, down 0.86% on the week.

Overseas buyers are not riding to the rescue. Importers' price expectations remain low and Chinese sellers struggle to meet them, which caps volumes even when inquiries improve. China's total steel exports fell 6.1% month on month to 9.85 million tonnes in October, leaving January-October shipments at 95.5Mt, down 2.3% on the year.

The list of closed or narrowing doors keeps growing. South Korean steelmakers are lobbying for duties on Chinese hot-dip galvanised coil after imports nearly quadrupled in nine months. In Europe, tight Import quotas and carbon border costs already keep most cheap Asian coil out.

There is some support underneath. A survey of 86 warehouses showed social HRC stocks down 1.93% on the week to 4.74Mt in early November. Hopes that the new Democratic-controlled US Congress could chip away at tariffs have also lifted export expectations.

How it plays out

For now the balance still tilts towards sellers cutting. Construction activity slows as the northern winter sets in, and mills that keep hot-strip lines running have to push tonnes abroad. That hands Leverage to importers in Vietnam, Pakistan and the Gulf, who can play Chinese mills and traders off against each other.

The losers are Chinese producers' margins and rival Asian exporters. At about US$485/t, Chinese coil sits roughly 44% below the NW European ex-works price of about US$861/t, and at about a third of Nucor's US spot price once converted to metric tonnes. That gap is exactly why protectionism keeps spreading.

Costs offer no firm floor either. Coke prices are expected to soften and iron ore to consolidate, weakening cost support, yet the most-traded HRC Futures Contract is still seen trading in a 3,170-3,250 yuan range with a mild upward bias. A rebound in domestic hot coil has also been noted.

Next week, watch whether that domestic bounce feeds through to export offers, whether deals stay inside the US$479-486/t band, and whether any new trade cases emerge in Asia. A sustained break below US$480/t would signal that mills are prioritising Volume over price into year-end.