Posted on 08 Oct 2024
Production of hot-rolled coils (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors decreased to 2.96 million tonnes during the week of September 23-27, falling for the third week by 50,000 tonnes or 1.66% on week and hitting a new low since early January, Mysteel's latest weekly production survey shows.
The hot-rolling capacity utilization rate among the 37 mills also eased by 1.28 percentage points to average 75.69% during the past week, the survey findings showed.
Behind the on-week decline in HRC output was mainly the fact that some steelmakers in North China diverted their hot metal from producing coils to other steel products offering better returns including rebar, respondents noted.
During the survey period China's HRC market gained strong upward momentum from several fronts, market sources observed.
The improved sentiment brought about by China's series of stimulus policies for economic growth encouraged end-users to actively procure hot coils last week, both for speculative buying and for replenishment ahead of China's National Day holiday over October 1-7.
Decreased production and increased demand produced a healthier HRC market last week, with hot coil prices rebounding and stocks falling.
As of September 26, HRC inventories at the commercial warehouses Mysteel monitors in 33 Chinese cities nationwide had dropped by another 5.09% on week to 3.16 million tonnes, touching a new low since mid-February.
By the same day, HRC stocks held by the 37 sampled mills had also eased by 5.8% on week to 836,500 tonnes, the lowest level since late January.
Regarding prices, by September 27 China's spot price of Q235 4.75mm HRC under Mysteel's assessment had risen by Yuan 162/tonne ($23.1/t) or 5.08% on week to reach Yuan 3,351/t including the VAT.
Similarly, the Shanghai Futures Exchange's most-traded HRC futures contract for January delivery closed the daytime trading session at Yuan 3,430/t on September 27, also higher by Yuan 202/t or 6.3% on week.
Source:Mysteel Global