Chinese HRC market sees increase though traders lack confidence

During the past week, the Chinese hot rolled coil (HRC) registered an increase, though traders were not very confident about the prospects for the rising trend. The average HRC prices in the main markets in China are as follows:

On March 29, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,650/mt ($706/mt), RMB 4,670/mt ($709/mt) and RMB 4,760/mt ($722/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm HRC stands at RMB 4,800/mt ($728/mt), RMB 4,730/mt ($718/mt) and RMB 4,900/mt ($744/mt) respectively in the abovementioned markets. All the above prices include 17 percent VAT (US$1 = RMB 6.59).

Steel futures market prices have increased in China, while raw material prices have also risen. These two factors have influenced the rebound in HRC market prices. Semi-finished steel prices in the Tangshan district also increased during the past week.

Generally speaking, considering the above factors, HRC traders have increased their prices tentatively. Some traders with abundant funds have replenished their stocks. As the month is ending, other traders have been seeking to sell off materials in order to bring in cash, and so they have sold at comparatively low prices. This situation restricted the price increase in the market to a certain degree.

On March 25, aggregate inventory in the main Chinese cities totaled 4,950,040 mt, 31,720 mt less than in the previous week. HRC inventory in Shanghai on the same date was 1,746,070 mt, 7,130 mt less than in the previous week.

Although Chinese HRC market prices have increased to a certain extent in the past week, most traders are not very confident about the prospects for a continuation of the rising trend in the coming period. It is still not clear when end-user demand will be released.