Chinese hot rolled prices still dominated by fluctuations

The Chinese domestic hot rolled market was characterized by fluctuations in the past week. Notwithstanding sufficient capital availability and the general optimism of market players, China's domestic hot rolled market came under pressure from high inventory levels and soft demand during the past week, and so the rising momentum for market prices was not very strong. Over the past week export quotations of Chinese HRC continued to rise, though an obvious reduction was seen in the trading volume.

In the past week, Chinese steel giant Baosteel hiked its ex-factory prices for wide and heavy plate by RMB 200-300/mt ($29-44/mt) for August, and it is said that Baosteel may also adjust its HRC prices for August in the coming days. Currently, most traders are standing aside as they wait to see Baosteel's further price adjustment; however, other players still appear fully confident in the future.

Following the arrivals of new materials, the tight supply situation of SPHC materials of thin specifications in the eastern China market has been relieved in the past week. Meanwhile, the market in the south has still been characterized by a soft trading performance, with most traders adopting a cautious approach. In the northern regions, the local market only received limited arrivals from Shougang and Chengde Steel over the past week. With almost no change observed in the supply and demand relationship, it is generally anticipated that the Chinese hot rolled market will continue its fluctuating movement in the coming week.

According to the latest figures, hot rolled inventory in Shanghai amounted to 820,000 mt on July 3, up 27,000 mt week on week.

On June 29, Lianyuan Steel raised its HRC prices by RMB 180/mt ($26/mt), with its price of 5.75 mm HRC climbing to RMB 3,830/mt ($561/mt). On June 30, Laiwu Steel hiked its HRC prices by RMB 50/mt ($7/mt), with its new price of 5.75 mm HRC at RMB 3,650/mt ($534/mt).

HRC imports have remained scarce in the Chinese market over the past week. As regards the export market, offers of Chinese HRC have continued their uptrend, climbing by a margin of $10-20/mt week on week, with the export destinations mainly in the Southeast Asian region. Nevertheless, due to the continuous increase in export prices over a period of three consecutive weeks, overseas buyers seem to hesitate to make purchases and the trading volume for ex-China material has recorded an obvious shrinkage. At present, common carbon hot rolled coils from China are generally offered to the export market at $520-530/mt FOB.