During the week ended August 21, hot rolled coil (HRC) prices in the Chinese domestic market have continued to decline. Average HRC prices in China can be viewed in the SteelOrbis price reports section.
Amid significant declines in the steel futures market, traders have become more pessimistic. Despite the low HRC inventory levels held by traders, there are no signs of a recovery regarding demand. As many banks have stopped issuing loans to steel companies, many traders are now facing significant financial difficulties.
On August 20, major domestic steelmaker Anshan Steel announced its new prices for September shipment, lowering its HRC offers by RMB 250/mt ($39/mt). As a result, the HRC price of the steelmaker is now RMB 3,140/mt ($495/mt) for 5.5 mm x 1,500 mm x C size, excluding taxes. In addition, many other steel producers have also announced reductions in their offers for HRC products, citing decreasing raw material costs as the main factor.
With no improvement observed in macroeconomic data, market demand is not expected to rebound in the near term. Although the mills' overhaul programs seem to have boosted market sentiment to some small extent, production capacity has not really declined. Market insiders think that steel prices may firm up after the third quarter this year supported by some anticipated improvements in the domestic economy. For the coming period, it is expected that HRC prices in the Chinese market will continue to follow their weak trend.