In the past week, the Chinese hot rolled coil (HRC) market has continued to soften slightly. The average HRC prices in the main markets in China are as follows:
Product name |
Specification |
Category |
Average price (RMB/mt) |
Weekly change (RMB/mt) |
Price ($/mt) |
Weekly change ($/mt) |
HR |
5.75 mm x 1,500 mm |
Q235B |
4820 |
-10 |
755 |
-2 |
HR |
2.75 mm x 1,250 mm |
Q235B |
4887 |
0 |
766 |
0 |
As of August 31, the prices of Q235/S400 5.75 mm HRC in Shanghai, Tianjin and Lecong are respectively RMB 4,780/mt ($749mt), RMB 4,740/mt ($743/mt) and RMB 4,950/mt ($774/mt). For Q235 2.75 mm HRC, prices stand at RMB 4,860/mt ($762/mt), RMB 4,780/mt ($749/mt) and RMB 5,020/mt ($787/mt) in the abovementioned cities. All prices include 17 percent VAT ($1 = RMB 6.38).
In the main Chinese HRC markets, as of August 26, aggregate inventory totaled 4,304,140 mt, indicating a decrease of 3,720 mt week on week, while inventory in the Shanghai market amounted to 1,541,910 mt, rising by 3,950 mt week on week.
Due to low demand in the market, traders are anxious about the market situation in September, when steel sales usually flourishes, so they are cautious in concluding new bookings. Under the pressure of reduced capital, some traders had to sell off their inventories and this has caused HRC prices to slightly fall.
The Chinese Central Bank has recently decided to make a policy shift that increases banks' requirements to keep funds in reserve rather than use them to make loans. With this move it is expected that RMB 800 billion ($125 billion) capital will be frozen in the market. Therefore, the Chinese Central Bank is still holding capital flow tightly. Industry insiders expect Central Bank to raise deposit reserve ratios two or three times in the next six months.
Summing up, it is expected Chinese HRC market to slightly trend sideways.