Posted on 17 Oct 2023
Production of hot-rolled coil (HRC) among the 37 Chinese flat steelmakers Mysteel regularly monitors reversed down from the previous week's gain and lost 31,000 tonnes or 1% on week to 3.17 million tonnes during October 5-11.
Survey respondents attributed the on-week drop to the fact that some steel mills in North China trimmed their HRC production due to fewer orders or commenced maintenance works on their blast furnaces because of negative steel margins.
Mysteel's survey found that the hot-rolling capacity utilization rate among the 37 mills had moved lower by 0.79 percentage point on week to 80.97% over the survey week.
Although October is a traditional peak month for steel consumption in China, the country's hot coils market remained tepid in overall, sources commented.
For their part, downstream HRC users generally held a cautious stance and only purchased the flat product for immediate needs during the survey period, market sources noted, adding that the contradiction between high output and weak demand continued to widen.
HRC stocks at commercial warehouses Mysteel follows in the 33 Chinese cities mounted further by another 13,600 tonnes or 0.4% on week to hit an eight-month high of 3.06 million tonnes as of October 12.
The weak market fundamentals also weighed on HRC prices in both the spot and futures markets during the survey period, Mysteel Global noted.
For example, as of October 13, China's national price of Q235 4.75mm HRC came in at Yuan 3,843/tonne ($525.6/t) including the 13% VAT, down by Yuan 61/t from October 7, a make-up working day after China's Mid-Autumn Festival and National Day holidays (over September 29-October 6).
Meanwhile, on the Shanghai Futures Exchange, the most-traded HRC contract for January 2024 delivery closed at Yuan 3,727/t when the daytime trading session ended on October 13, losing Yuan 21/t from the settlement price on October 9, the exchange's first trading day after the long holiday break.
Source:Mysteel Global
