Demand-stimulated sentiment soared last week, pushing up Chinese hot rolled coil prices in both domestic and export markets amid overseas price hikes. The withdrawal of supply to Europe from Russian mills such as Severstal, and its diversion to Asian markets, is also making Chinese exporters eye opportunities to land in Europe, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 5,200-5,220/tonne ($823-826/t), surging CNY 310/t week-on-week. On the Shanghai Futures Exchange, meanwhile, the May 2022 contract for HRC lost CNY 39/t from Thursday but gained CNY 414/t on-week to CNY 5,210/t, touching a record high on Thursday since the end of October last year.

The expanding manufacturing industry and the country's ongoing supportive policies have driven a rapid recovery in domestic HRC demand. Soaring international HRC prices have also driven domestic funds into HRC because rebar has been relatively weak.

Chinese export prices also rose rapidly to keep up with global developments. The most competitive May-shipment SAE 1006 HRC offers jumped to $900-910/t cfr Vietnam on Friday, $30/t higher than one week earlier. A bullish Chinese trader said on Wednesday: “No exporter would give offers lower than $900/t this week.”

Over 100,000 tonnes of 2mm+ SAE 1006 HRC was sold by several Chinese steelmakers at $870-880/t cfr Vietnam during the week ending 25 February, but “China would not sell at this level now”, three Chinese traders commented on Friday.

Kallanish assessed 2mm SAE 1006 HRC at $845-850/t fob China on 4 March, up CNY 32.5/t on-week.

Chinese exporters are now looking forward to European opportunities since Severstal has decided to try to target Asian customers following sanctions imposed in Europe.

“Yes, big chance!” a source at a major Chinese steelmaker told Kallanish when asked about its HRC sales possibilities in Europe. Indian and Turkish sellers alone may be unable to replace the monthly volume of 170,000t previously supplied by Russia.

Since 2017, several big steelmakers such as HBIS, Angang, Magang and Baowu Wugang have been levied with an anti-dumping duty of 10.3-31.3% for HRC exported to the EU, unlike other Chinese mills. This could still leave Chinese HRC priced at an advantage over regions such as India and Japan, however.