Posted on 17 May 2023
Prices of hot-rolled coil (HRC) in China's domestic market continued the downward trend over May 8-15. The dull demand from end-users and lower production costs among steelmakers were blamed for the softening in the coil prices, a market insider said.
As of May 15, China's national price of Q235 4.75mm HRC had fallen to Yuan 3,884/tonne ($557.2/t) including the 13% VAT, down by Yuan 61/t from one week earlier.
Many traders trimmed their offering prices to facilitate sales during the survey period, a Shanghai-based analyst noted. However, most end-users procured only to fulfill immediate production demand on bearish sentiment.
Besides, the weakening prices of steelmaking materials such as iron ore and coke also failed to support steel prices, he added. As of May 15, Mysteel SEADEX 62% Australian Fines had decreased by $1.3/dmt from May 8 to $107.85/dmt CFR Qingdao.
Some mills in Northeast and South China halted production to conduct maintenance works, leading to a fall in the overall HRC output, he commented.
Production of hot coils among the 37 Chinese steelmakers Mysteel tracks had dropped to 3.1 million tonnes over May 4-10, down by 54,300 tonnes or 1.7 % on week, while hot-rolling capacity usage among the sampled mills also slipped by 1.38 percentage points on week to 79.95%.
Nonetheless, given the lackluster sales, the HRC stocks at trading houses across the 33 cities under Mysteel's tracking had grown for the fifth week by another 108,100 tonnes or 4.1% to 2.8 million tonnes as of May 11. Meanwhile, HRC inventories held by the 37 surveyed mills eased by 400 tonnes on week to 929,100 tonnes as of May 10.
The analyst predicted the HRC prices to keep slipping in the near term, as the demand is likely to wane further with the slack season for HRC consumption drawing near.
Source:Mysteel Global
