Chinese HRC market indicates slight downtrend

Over the past week, the Chinese hot rolled coil (HRC) market has moved down slightly compared with the previous week.
 
On May 17, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,770/mt ($730/mt), RMB 4,770/mt ($730/mt) and RMB 4,960/mt ($760/mt) respectively in the Shanghai, Tianjin and Lecong markets, with an average week-on-week decline of RMB 20/mt ($3/mt). In addition, Q235 2.75 mm HRC stands at RMB 4,880/mt ($747/mt), RMB 4,820/mt ($738/mt) and RMB 5,070/mt ($776/mt) respectively in the abovementioned markets, down RMB 17/mt ($3/mt) as compared to previous week. All the above prices include 17 percent VAT (US$1 = RMB 6.53).
 
Influenced by low demand in the downstream market and the weakening of steel futures prices, market prices of hot rolled products have started to fall, though transaction activity has been sluggish. In addition, the Chinese central bank has announced a hike in the deposit reserve ratio by another 0.5 percentage points, and so availability of funds in the markets will be tightened further.
 
On the mills' side, Baosteel has kept its June prices unchanged, while Hubei Province- based Wuhan Iron and Steel (WISCO) has increased its prices of hot rolled products by RMB 50/mt ($7/mt) - providing strong support for the domestic hot rolled product market.
 
As regards inventory, on May 13 the aggregate inventory of hot rolled products in China's main cities was 4,424,480 mt, up 33,540 mt week on week - the first increase after eight consecutive weeks of decrease. On the same date, inventory in Shanghai was 1,590,940 mt, up 3,050 mt week on week.
 
For the coming week, it is thought that the Chinese hot rolled coil market may still indicate weakness.