After trending downward for the previous two weeks, during the past week the Chinese hot rolled coil (HRC) market has seen a small uptick. However, the general market situation remains unstable. HRC inventory in China has recorded a significant drop during the past week. 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 |
4,327 |
+7 |
649 |
+1 |
HR |
2.75 mm x 1,250 mm |
Q235B |
4,450 |
+13 |
667 |
+2 |
On November 30, Q235/S400 5.75 mm hot rolled coil (HRC) prices stand at RMB 4,290/mt ($643/mt), RMB 4,320/mt ($648/mt) and RMB 4,370/mt ($655/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, Q235 2.75 mm HRC stands at RMB 4,420/mt ($663/mt), RMB 4,380/mt ($657/mt) and RMB 4,550/mt ($682/mt) respectively in the abovementioned markets. All the above prices include 17 percent VAT (US$1 = RMB 6.67).
The significant drop in inventory during the past week has given traders some confidence. The inventory drop was influenced by government policy measures aimed at saving energy and reducing emissions and was, in addition, due to the low volume of supplies delivered by northern steelmakers to southern districts, while snowy weather conditions also influenced transportation in northern districts.
On November 26, aggregate hot rolled coil inventory in the main Chinese cities was 4.6604 million mt, down 35,600 mt from November 19. Eastern China registered the biggest decrease in inventory levels during the week in question. Inventory in Shanghai on November 26 was 1,850,570 mt, down 1,980 mt week on week.
During the past week, market players have been maintaining a wait-and-see stance. New supplies are priced at high levels, with spot market prices lower than ex-mill prices. Many traders consider that mills' distributors may keep prices at elevated levels given the high costs. It is thought that market prices are unlikely to see any significant drop in the coming period. At the same time, considering the macroeconomic situation and the tightness of capital supply coming towards the end of the year, there appears to be limited room for the domestic HRC market to rise.
The Chinese HRC market is expected to indicate slight fluctuations in the coming week.