Chinese HRC market starts to decline, prices indicate variation

During the past week, the Chinese hot rolled coil (HRC) market first moved up, before sliding back down. Market prices are now a little lower than they were one week ago. Current average prices of hot rolled coil in the main markets in China are as follows:

On May 10, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,820/mt ($739/mt), RMB 4,780/mt ($733/mt) and RMB 4,960/mt ($761/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm HRC stands at RMB 4,900/mt ($752/mt), RMB 4,830/mt ($741/mt) and RMB 5,090/mt ($781/mt) respectively in the abovementioned markets. All the above prices include 17 percent VAT (US$1 = RMB 6.52).

In the past week, impacted by official government policies aimed at achieving energy savings and emission reductions and at rationing power supply, market prices initially surged, but then fell back down due to the weak overall domestic market situation, the turbulent international financial markets and the volatile Chinese steel futures market. Accordingly, quotations from traders are seen to vary significantly.

The rationing of power supply is exerting a negative impact on the production of some mills. However, China's largest steel producing province, i.e., Hebei, has not been affected by the power rationing policy so far. In addition, the steel futures market is still on a downward trend, and some insiders consider that prices in the futures market may continued to decline in the coming period.

As for inventory, on May 6 the aggregate inventory of hot rolled products in China's main cities amounted to 4,390,940 mt, down 27,560 mt week on week. On the same date, inventory in Shanghai was 1,587,890 mt, down 3,430 mt week on week.

Currently, China's hot rolled coil market is still characterized by weakness and could see slight downward fluctuations in the coming week.