Posted on 12 Mar 2024
Production of hot-rolled coils (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors rebounded during the week of March 4-8 from the decline of the previous two weeks to total 3.11 million tonnes, the results of the latest weekly production survey show. This represented a gain of some 105,900 tonnes or 3.5% on week.
Accordingly, the hot-rolling capacity utilization rate among the 37 mills also moved higher by 2.7 percentage points on week to average 79.42% last week, the survey found.
Some steel producers in Northeast China resumed operations after completing maintenance stoppages during the sample period, resulting in the on-week rise in hot coil output, survey respondents noted.
Meanwhile, HRC stocks at the 37 surveyed mills continued to decrease during the week, with the tonnage easing by another 2.8% on week to sit at 936,500 tonnes as of March 7. The decline was mainly attributed to the fact that steel mills in North, Central and South China resumed making deliveries at normal levels after the public holidays, namely the Chinese New Year holiday that ended on February 17 and China's Lantern Festival that ended on February 24, respondents explained.
On the other hand, hot coil inventories at commercial warehouses in 33 cities under Mysteel's tracking continued to mount during the same period, rising by another 2.7% on week to reach 3.49 million tonnes as of March 7, reflecting slack downstream demand for hot coils across China.
In fact, the slower-than-expected recovery of HRC demand has also weighed on spot and futures market prices of the coils. As of March 8, China's spot price of Q235 4.75mm hot-rolled coil under Mysteel's assessment was at Yuan 3,962/t ($551.5/t) including the VAT, lower by Yuan 76/t or 1.9% on week and hitting about a four-month new low.
On the Shanghai Futures Exchange as of the same day, the most-traded HRC futures contract for May delivery had also lost 1.8% from the March 1 settlement price to close the daytime trading session at Yuan 3,841/t.
Source:Mysteel Global
