During the past week ending December 6, the Chinese hot rolled coil (HRC) market has increased slightly in spite of overall weak demand. Local HRC prices in China can be viewed in the SteelOrbis price reports section.
The Chinese central bank has reduced the deposit reserve ratio for domestic financial institutions by 0.5 percentage points effective as of December 5, thus providing some good news for the steel markets in China. Accordingly, prices of hot rolled steel products in the main local markets in China initially indicated an increase, but then resumed a sideways trend amid sluggish demand.
Traders have stated that mainstream HRC supplies in the Shanghai market were mainly purchased in October and November and that current transactions in the local spot market are being concluded at a loss. Also, some state-owned and large-scale steel mills are reluctant to sell large tonnages. Most traders lack optimism for the market after the Spring Festival, which will take place earlier than in previous year, with downstream demand still expected to be weak due to the cold weather.
Overall, the Chinese HRC market is still quiet amid slack demand on the downstream side. It is expected that Chinese HRC prices will continue to remain soft in the coming period.