On May 7, the central parity rate of RMB against the US dollar reached 6.6665, down 0.73% from the previous week and 4.7% from the previous month. The weakening exchange rate has put some pressure on the dollar denomination of China’s steel resources. This week, the HRC offers of China’s leading steel mills are highly differentiated. The lower-level transaction in Hebei is at US$770/ton FOB, while the quotations from state-owned steel mills are at US$830-840/ton FOB. Mysteel estimates that the mainstream export transaction of SS400 in Tianjin Port The level is at $800/ton, down $15/ton from the previous month.
The reason for the large price differentiation is that the price of spot resources in China’s domestic trade is still in a depression, and the exchange rate drop has created room for exporters to reduce prices. On May 7, the mainstream transaction price of Shanghai HRC spot resources was US$4,880/ton, which was about US$70/ton lower than the mainstream export price of Tianjin Port. On the other hand, some leading mills are reluctant to lower their export quotations as production costs remain high and are also trying to maintain their ex-works prices for domestic delivery.
At present, the purchasing demand of Asian buyers is not good, and only some low-level resources are relatively easy to deal. In addition, Southeast Asian importers are also waiting for the July prices of steel mills such as Vietnam’s Formosa Plastics next week. Chinese exporters have reported that a drop in local mills’ offers may prompt Chinese exporters to further lower their export offers.
Post time: May-09-2022