During the past week, the Chinese hot rolled coil (HRC) market has continued to rise, supported by costs. On January 18, the average HRC prices in 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 |
4,710 |
+57 |
716 |
+9 |
HR |
2.75 mm x 1,250 mm |
Q235B |
4,830 |
+47 |
734 |
+7 |
On January 18, Q235/S400 5.75 mm hot rolled coil prices stand at RMB 4,650/mt ($707/mt), RMB 4,740/mt ($720/mt) and RMB 4,740/mt ($720/mt) respectively in Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm hot rolled coil (HRC) stands at RMB 4,850/mt ($737/mt), RMB 4,780/mt ($726/mt) and RMB 4,860/mt ($739/mt) respectively in the abovementioned markets. All the above prices include 17 percent VAT (US$1 = RMB 6.58).
Traders optimistic on prospects for HRC market in coming period
Several factors have been providing supported for increased HRC prices in China. On the one hand, major domestic steel producers Baosteel, Wuhan Iron and Steel (WISCO), Angang Steel and Shougang Group have all increased their ex-mill HRC prices for February. On the other hand, many mills are carrying out overhauling work before the end of the Chinese year, and so in January new HRC arrivals are on the low side. Thirdly, inventory in China's HRC market has decreased on a week-on-week basis. As a result, traders of HRC in China are optimistic on the prospects for the market in the coming period.
As most traders are optimistic on the HRC market situation after China's Spring Festival (early February), most of them are inclined to delay their HRC sales. Some traders, however, have said that it is not so good to see HRC price increases before the Spring Festival because this will reduce the space for price increases after the festival. The transaction situation has generally been good in the domestic HRC market in the past week, though not as good as in the previous week; however, the current transaction volume is normal for the time of the year.
On January 14, 2011, aggregate hot rolled coil inventory in the main Chinese cities was 4.3808 million mt, down 12,780 mt week on week. HRC inventory in Shanghai on January 14 was 1,760,480 mt, down 12,080 mt week on week.
As an additional reason for traders' optimism, iron ore prices are at high levels. India has restricted iron ore exports and is reported to be considering the imposition of a 20 percent iron ore export tax. Australia, a major coke exporter, has been hit by floods, contributing to the rise in international coke prices.
Generally speaking, higher raw material prices and increased HRC ex-mill prices are providing support for China's HRC market. With the Spring Festival approaching, many trading company are expected to leave the market next week, and so prices may not change much in China's HRC market in the coming week.