China's domestic hot rolled market declined considerably over the past week, with the decrease in some regions exceeding RMB 150/mt ($22/mt). As a result of the reduced orders placed by traders, mills gradually began to come under increased inventory pressure. In addition, major steelmakers Baosteel and WISCO both released their ex-factory prices for May in the past week.
Product name |
Specification |
Category |
Average price(RMB/mt) |
Weekly change (RMB/mt) |
Price($/mt) |
HR |
5.75 mm x 1,500 mm |
Q235B |
3,170 |
-147 |
464 |
HR |
2.75 mm x 1,250 mm |
Q235B |
3,333 |
-110 |
488 |
Since mills' March and April prices failed to meet general market expectations, Chinese traders made an obvious reduction to their order volumes placed with the mills for March. In this context, faced with mounting inventory levels, the mills are likely to attempt to sell off their stocks in the coming period, resulting in a mass flow of low-priced supplies to the market and driving down market prices accordingly. In addition, traders have recently been putting more pressure on market prices so as to compel mills to further reduce prices, thus enabling traders to acquire materials at lower costs. These factors have mainly accounted for the obvious drop observed in market prices in the past week. It is estimated that, with room still available for further downward movement in April prices, the market will hit a new low in the coming days.
According to the latest statistics, hot rolled inventory in Shanghai amounted to 763,890 mt on April 3, down 21,920 mt week on week.
Last week, Baosteel, WISCO, and Shagang successively released their ex-factory prices for May. Baosteel slashed its HRC prices by RMB 200/mt ($29/mt); WISCO maintained its HRC prices unchanged; and Shagang lowered its prices by RMB 120/mt ($18/mt). In general, the ex-factory HRC prices of most Chinese mills are around the level of RMB 3,300/mt ($483/mt), while the hot rolled prices of Baosteel and WISCO still appear slightly higher compared with the general levels.
China's major hot rolled producers are reported to be planning to produce around 8.458 million mt of hot rolled products in April, with the capacity utilization rate reaching 80.86 percent. Exports in April are estimated to reach 57,000 mt, with 6.113 million mt of hot rolled products destined for the domestic market, up 427,000 mt month on month. Thus, in April, the capacity utilization rate of China's major hot rolled producers is expected to show an increase, accompanied with an increased output for the domestic market, while the export market is expected to remain sluggish.