Posted on 26 Dec 2023
Production of hot-rolled coil (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors reversed up last week from the declines of the two previous weeks to reach 3.17million tonnes during December 18-22, according to Mysteel's weekly production survey. This was higher by 25,700 tonnes or 0.8% on week.
In tandem, the hot-rolling capacity utilization rate among the 37 mills also averaged 80.96% last week, higher by 0.66 percentage point on week, the survey results showed.
Behind the on-week rise in HRC output was the fact that some steelmakers in East China resumed hot coil production during the survey period, respondents said.
In parallel, hot coil inventories also mounted during the survey week, with the flat product's stocks at the 37 surveyed mills under Mysteel's tracking climbing by 4.3% on week to reach 899,300 tonnes as of December 21.
Specifically, the increase in HRC stocks mainly came from China's eastern and northern regions, with the former experiencing increased coil production and the latter seeing slower HRC deliveries due to the worsening winter weather, Mysteel's survey found.
On the other hand, the relatively stable demand for hot coils saw the product's stocks continue falling during the survey week. The tonnage at commercial warehouses in the 33 cities under Mysteel's tracking, for example, lost another 5.3% on week to sit at 2.24 million tonnes as of December 21, hitting a near one-year new low since early January this year.
Notably, however, market sentiment remained cautious overall, with buyers just purchasing coil for their immediate needs and having little appetite for high-priced HRC, market watchers noted.
As of December 22, China's spot price of Q235 4.75mm hot-rolled coil under Mysteel's assessment was at Yuan 4,104/t ($574.9/t) including the VAT, inching up by 0.8% on week. On the Shanghai Futures Exchange the same day, the most-traded HRC futures contract for May 2024 delivery also went higher by 1.8% from the December 15 settlement price to close the daytime trading session at Yuan 4,120/t.
Source:Mysteel Global
