After posting a climbing movement during the previous two weeks, the Chinese hot rolled market has been characterized by fluctuations over the past week. Stimulated by the rising movement of the previous weeks, a certain release of downstream demand had been observed, resulting in a decline in hot rolled inventories in the leading regional markets. However, with no fundamental diminution seen in production levels and in the pressure exerted by market inventory, the overall upward movement of market prices came to a halt, and was replaced by a fluctuating trend instead.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
HR | 5.75 mm x 1,500 mm | Q235B | 3,543 | -57 | 520 |
HR | 2.75 mm x 1,250 mm | Q235B | 3,720 | -50 | 545 |
Looking at the current situation, over the past week end-side users have reduced their purchases of materials and have begun to buy strictly in order to meet their needs. In the context of the current fluctuating movement of market prices, traders are anxious to raise their prices given the limited profit margins; however, they do not dare to do so out of concern that market demand is not sufficient to support a continuous increase of market prices. On the other hand, China's leading mills are still unwilling to cut their production levels, with the result that market supply continues to exceed demand levels, which is one of the main factors preventing prices from climbing up further.
Hot rolled inventory in China's leading markets has declined in the past week. According to the latest figures, total hot rolled inventory in China's leading markets stands at 3.79244 million mt, down 71,770 mt week on week. Moreover, hot rolled inventory in Shanghai amounted to 1.28894 million mt on October 30, up 16,030 mt compared with the level on October 23.
On the mills' side, both upward and downward adjustments were made by various mills to their ex-factory prices during the past week.
On October 28, Laiwu Steel hiked its HRC prices by RMB 100/mt ($15/mt), with its new price of 5.75 mm HRC at RMB 3,500/mt ($513/mt).
Meanwhile, also on October 28, Hebei Steel Group lowered its HRC prices by RMB 150/mt ($22/mt), with its 5.75 mm Q235 HRC now offered at RMB 3,500/mt ($513/mt).
On October 30, Lianyuan Steel raised its HRC prices by RMB 120/mt ($18/mt). As a result, its ex-factory price of 5.75 mm Q235 is now at RMB 3,680/mt ($540/mt).
All the above prices include 17 percent VAT. ($1 = RMB 6.82)
Overall, although hot rolled inventory in China's leading markets has slipped down slightly, the market does not seem to have gained any relief from the pressure exerted by high inventory levels. In the absence of any positive news, traders are expected to continue to adopt a cautious approach towards market trading. In this context, the hot rolled market in China is expected to retain its fluctuating movement in the coming week.