During the past week the Chinese hot rolled coil (HRC) market has started to enter a downward trend. Meanwhile, there has been a slight drop in overall market inventory and the market transaction situation is less than satisfactory.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
HR | 5.75 mm x 1,500 mm | Q235B | 4,190 | -77 | 617 |
HR | 2.75 mm x 1,250 mm | Q235B | 4,327 | -36 | 637 |
On August 24, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,160/mt ($613/mt), RMB 4,150/mt ($611/mt) and RMB 4,260/mt ($627/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm HRC stands at RMB 4,280/mt ($630/mt), RMB 4,250/mt ($626/mt) and RMB 4,450/mt ($655/mt) respectively in the Shanghai, Tianjin and Lecong markets. All the above prices include 17 percent VAT (US$1 = RMB 6.79).
Influenced by the drop in the domestic steel futures price, the Chinese HRC market has also declined over the past week. Some traders under pressure from high inventory have started off sell materials, causing market prices to decrease; meanwhile, influenced by costs, some traders are maintaining the high levels of their offers. Generally speaking, the market transaction situation is poor. Traders hold diverse opinions as regards the outlook for the future, though most of them are adopting a cautious approach to market activity.
Inventory in the major Chinese markets has decreased slightly. On August 20, total inventory in the main Chinese cities was 4.4564 million mt, down 2,900 mt week on week. The region with the greatest increase was the eastern Chinese market. On August 20, inventory in Shanghai was 1,756,970 mt, down 9,784 mt week on week.
According to data published by the China Iron and Steel Association (CISA), in early August (August 1-10) its member companies produced 14.13 million mt of crude steel, with estimated total crude steel production for the period in China at 17.19 million mt, and with respective daily output figures at 1.413 million mt and 1.719 million mt, up 29,000 mt and 77,000 mt month on month respectively. Thus, with its daily crude steel output having decreased for three consecutive months, China's domestic crude steel output has begun to increase again at the start of August.
Generally speaking, high inventory and low demand are the main factors exerting a negative impact on the price trend in the Chinese HRC market. However, due to high costs, it is expected that the current price decrease will be limited and that the market will follow a fluctuating trend in the coming week.