Chinese HRC market continues to trend sideways

In the past week, hot rolled coil (HRC) prices in the Chinese market have continued to trend sideways. The average HRC prices in the main markets in China are as follows:

As of August 3, the prices of Q235/S400 5.75 mm HRC in Shanghai, Tianjin and Lecong are respectively RMB 4,820/mt ($748mt), RMB 4,730/mt ($734/mt) and RMB 4,970/mt ($772/mt). For Q235 2.75 mm HRC, prices stand at RMB 4,810/mt ($747/mt), RMB 4,760/mt ($739/mt) and RMB 5,020/mt ($780/mt) in the abovementioned cities. All prices include 17 percent VAT ($1 = RMB 6.44).

HRC inventory has continued to rise in China's main markets, though at a slower rate than in the previous week. On July 29, overall HRC inventory in China's main markets totaled 4.30439 million mt, indicating an increase of 38,510 mt compared with the prior week, including 1,500,850 mt in Shanghai, with an increase of 15,500 mt week on week.

The stock markets and the weakness in the domestic steel futures market have been exerting a significant influence on the steel markets in China. In the past week, domestic HRC traders have adopted a wait-and-see approach, while downstream demand is also low.

In the past week, mills have mostly increased their prices, with both Rizhao Steel and Ningbo Steel both raising their HRC prices. In addition, Anshan Iron and Steel Co. will repair its 1,580 mm HRC production line in early August for seven days, which will cause a shortfall of about 80,000 mt in its HRC output. Furthermore, Anshan Iron and Steel Co. will repair its 1,700 mm HRC production line in September.

Summing up, in China's HRC market the levels of inventory continue to increase, though the mills' price increases and planned repair works may bring some hope for traders. However, it seems difficult for downstream demand to pick up at present, and the market appears to have little support for price increases. It is predicted that China's HRC market will continue to trend sideways in the coming week.