Chinese HRC market softens slightly after increase

In the past week, the Chinese hot rolled coil (HRC) market has softened slightly following its previous rising trend. The average HRC prices in the main markets in China are as follows:

As of August 23, the prices of Q235/S400 5.75 mm HRC in Shanghai, Tianjin and Lecong are respectively RMB 4,800/mt ($751mt), RMB 4,740/mt ($742/mt) and RMB 4,950/mt ($775/mt). For Q235 2.75 mm HRC, prices stand at RMB 4,860/mt ($761/mt), RMB 4,780/mt ($748/mt) and RMB 5,020/mt ($786/mt) in the abovementioned cities. All prices include 17 percent VAT ($1 = RMB 6.39).

In the main Chinese HRC markets, aggregate inventory totals 4.30786 million mt, indicating a decrease of 15,500 mt week on week, while inventory in the Shanghai market totals 1.53796 million mt, up 5,400 mt week on week.

In the early days of the past week, steel futures prices rose and traders followed by increasing their HRC spot prices. Towards the end of the past week, however, the steel futures market softened and domestic demand for HRC was low, and thus market players started to adopt a wait-and-see approach again. Some traders have begun to decrease their prices, but transaction activity is still not at good levels.

The HRC prices of Benxi Steel Group have remained stable. This producer plans to repair its 1,880 mm thin slab continuous casting and rolling line, resulting in a drop of about 100,000 mt in HRC output. This producer also plans to repair its 1,700 mm hot rolling line over about 18 days, causing a further shortfall of about 200,000 mt in HRC output. In addition, Anshan Iron and Steel plans to repair its 1,700 mm hot rolling line during a period of about 23 days, resulting in a shortfall of about 150,000 mt in HRC output. In this context, domestic hot rolled product supply is expected to decline to some degree.

Summing up, it is expected that the Chinese HRC market will trend sideways in the coming week.