Significant declines in northern Chinese HRC market

In the week ending October 27, average hot rolled coil (HRC) prices in the Chinese domestic market have moved on a declining trend, while transaction activity in the overall market has been at low levels. Average HRC prices in the local Chinese market are presented in the table below.

During the given week, HRC prices have moved on a decreasing trend, with relatively large price declines seen in northern China and with HRC prices in Tianjin in particular falling to low levels. The approach of winter weather in northern China has started to exert a negative impact on demand for HRC products, resulting in fierce price competition among HRC traders in the region. Meanwhile, new supplies from Baogang, Chengde Iron and Steel and Tangsteel have arrived in the northern Chinese market, increasing the inventory levels of HRC traders. There exists a big gap between HRC prices in northern China and those in the eastern and southern regions of the country, which will likely cause supplies to flow from north to south in the coming period. It is thought that HRC prices in China are unlikely to indicate big declines in the coming week, though slight decreases may still be possible.

17 percent VAT is included in all prices and all prices are ex-warehouse.

$1 = RMB 6.35