Chinese domestic hot rolled coil prices still saw a strong uptrend over last week, despite demand shrinking to a low point for the year. Prices for export to Southeast Asia, meanwhile, surged as offers ticked higher, and buying returned, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was trading at CNY 3,880-3,900/tonne ($556-559/t), CNY 105/t higher from the previous Friday. On the Shanghai Futures Exchange, the May 2020 HRC contract closed CNY 6/t lower than Thursday and CNY 122/t higher over the week at CNY 3,556/t.

Spot market offer prices continued to strengthen in line with the futures price trend. Baosteel and Angang, meanwhile, have lifted offers for January 2020 by CNY 100-150/t. Market inventories have also reduced. Several domestic mills have converted to produce rebar rather than HRC due to higher margins, leaving HRC supply tight. However, as the deals are getting cold, a few traders finally gave CNY 10/t discounts on Friday afternoon. As prices strengthen, deals are not expected to recover until next year.

On export markets, one northern Chinese mill’s newest offer was $476/t fob China base at SS400. Official mill offers did not change significantly last week, but deals were concluded at $480/t cfr Vietnam for SS400. Prices in Southeast Asian destination markets have risen increasing rapidly as supply has tightened. Indian material is only available from position cargos, and one major Russian mill has stopped export offers.

While Chinese offer prices have only inched higher, realised prices have increased sharply. This has been helped by the strengthening of the Chinese yuan on Friday as US President Donald Trump hinted at a trade deal. This has led buyers to expect Chinese offers to increase further in response to the change in exchange rates. Kallanish assessed 2mm SAE1006 HRC at $470-476/t fob, $15.5/t higher on-week.