Domestic HRC prices in China have witnessed slight declines during the past week due to decreases in the steel futures market, while at the same time transaction activity has been quiet amid the absence of any significant improvement in downstream demand. With availability of supplies still limited, traders have not been inclined to increase sales volumes by cutting prices. As the Spring Festival is approaching, traders are maintaining a wait-and-see stance towards the future, and so they are less willing to build up inventory. Moreover, some traders have decided not to exit the steel business for the coming year as they only earned limited profits in 2012.
Overall, the high cost of raw materials and increases in steelmakers' ex-works prices still provide a certain amount of support for China's HRC market. It is expected that Chinese domestic HRC prices will continue their slight downtrend in the coming week.