Posted on 24 Jan 2024
Production of hot-rolled coils (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors declined for the third straight week during January 15-19 to sit at 2.94 million tonnes, falling by another 99,500 tonnes or 3.3% on week, the results of Mysteel's weekly production survey show.
In tandem, the hot-rolling capacity utilization rate among the 37 mills also moved lower by another 2.54 percentage points on week to average 75.06% last week, the survey found.
Some steel producers in South and Central China conducted maintenance on their steelmaking facilities during the survey period, resulting in the on-week decline in HRC output, survey respondents said.
In fact, the enthusiasm for HRC production among the country's steelmakers has generally cooled, mainly because of the thinned profit margins the makers can earn and because consumption for hot coils among users seems set to slide, with the eight-day Chinese New Year holiday just two weeks away, respondents noted.
Consequently, HRC stocks at the 37 surveyed mills had declined by another 2.1% on week to total 812,600 tonnes as of January 18. By the same day, inventories of the flat product at commercial warehouses in 33 cities under Mysteel's tracking had edged up by another 0.9% on week to reach 2.23 million tonnes.
In the absence of support from rising raw materials prices and downstream demand, Chinese prices of hot coils in both the spot and futures markets fell further during last week. As of January 19, the spot price of Q235 4.75mm hot-rolled coil under Mysteel's assessment was at Yuan 4,073/t ($566/t) including the VAT, easing by Yuan 13/t or 0.3% on week.
On the Shanghai Futures Exchange the same day, the most-traded HRC futures contract for May delivery had also lost another Yuan 8/t or 0.2% from the January 12 settlement price to close the daytime trading session at Yuan 4,032/t.
Source:Mysteel Global
