During the past week the Chinese HRC market has continued to trend sideways in general. HRC spot prices have indicated fluctuations due to changes in steel futures prices. Generally, the tendency in the market remains weak. Different opinions about the likely future trend exist in the market.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
HR | 5.75 mm x 1,500 mm | Q235B | 4,250 | -77 | 623 |
HR | 2.75 mm x 1,250 mm | Q235B | 4,407 | -53 | 646 |
As market prices fell below traders' acceptable price levels, a rebound started to be observed during the past week. However, since there has been no great change in the demand-supply situation, it is difficult for HRC prices to trend upwards. Due to weak market demand, HRC prices in the major Chinese markets declined again after their temporary uptick.
As to the future outlook, some optimistic traders consider that prices in the coming week will maintain their present levels. Other traders, however, consider that prices will fall. On the one hand, the gap between supply and demand is expanding; on the other hand, in light of rumors that the government could adjust the export tax rebate, some traders may sell off products in order to avoid risks.
Presently, domestic steelmakers and traders do not provide exportation quotations. Most deal prices are set according to each specific case. The general export price trend continues in a downward direction. The rumor concerning the possible cancelation of the nine percent export tax rebate has raised the concerns of foreign trading companies, especially those with certain levels of inventory. Thus, some companies are seeking to sell products to avoid risks.
Shagang Group has published its HRC price for early June, making a downward adjustment of RMB 300/mt ($44/mt); thus itse x-mill price of Q235 5.5 mm HRC is RMB 4,500/mt ($660). This price includes tax and will be implemented from June 1 to June 10.
Generally speaking, as a result of high costs traders risk incurring losses, and so they are not willing to lower their prices further. In this context, the market may not see any great drop in the coming week. Due to weak demand in the market and the lack of upward momentum, it is expected that the Chinese HRC market will continue to trend sideways in the week ahead.