During the past week the Chinese domestic hot rolled coil (HRC) market has trended upward. Market inventory in the main local markets has continued to drop down, but at a slower speed. The general transaction situation has not been good, but costs still provide strong support for market prices. Average HRC prices is the main markets in China are as follows:
Product name |
Specification |
Category |
Average price (RMB/mt) |
Weekly change (RMB/mt) |
Price ($/mt) |
Weekly change ($/mt) |
HR |
5.75 mm x 1,500 mm |
Q235B |
4,437 |
+47 |
667 |
+7 |
HR |
2.75 mm x 1,250 mm |
Q235B |
4,553 |
+36 |
685 |
+5 |
On December 14, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,390/mt ($660/mt), RMB 4,420/mt ($665/mt) and RMB 4,500/mt ($677/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm HRC stands at RMB 4,550/mt ($684/mt), RMB 4,480/mt ($674/mt) and RMB 4,630/mt ($696/mt) respectively in the abovementioned markets. All the above prices include 17 percent VAT (US$1 = RMB 6.65).
On December 10, aggregate hot rolled coil inventory in the main Chinese cities was 4.5574 million mt, down 24,500 mt week on week. The biggest decrease in inventory was seen in the eastern Chinese market. Inventory in Shanghai on December 10 was 1,827,500 mt, down 9,000 mt week on week. Inventory in the main Chinese markets has been declining for several weeks now, but a gradual slowdown is observed in the rate of decline. With winter arriving, end-user demand is not so good and transaction volumes are not satisfactory. As steel mill overhauls and electricity supply restrictions are about to come to an end, more supplies are expected to enter the market in the future.
Decreasing inventory and anticipated increases in costs provide support for market prices. Japanese steelmakers have reached agreement with Brazilian miner Vale on Q1 2011 iron ore prices, with the iron ore price increasing from $126/mt in Q4 2010 to $135/mt in Q1 2011, up seven percent quarter on quarter. It is expected that iron ore contract prices for Chinese buyers will see a similar increase. Meanwhile, domestic mills have recently published increased prices. On December 13, Wuhan Iron and Steel (Group) Corporation published its steel prices for January, with its HRC prices up RMB 100-260/mt ($15-39/mt). Steel mills are thus seeking to pass costs on to customers. Many traders expect that market prices will increase again after China's Spring Festival holiday.
Generally speaking, low inventory and high costs provide support for the market at present. It is expected that Chinese domestic HRC prices will continue their upward trend in the coming week.