Posted on 10 Oct 2024
Improved sentiment in China's steel market could see demand for carbon steel hot-rolled coils (HRC) rebound this month and drive up prices of the flat product in tandem, Mysteel's latest monthly report on the commodity suggests.
HRC prices had steadily decreased for most of September, undermining the profitability of the flat rolled makers and causing them to rein-in production, as reported. The improvement in China's steel market overall in late September finally helped the coil makers recoup some of their earlier losses.
In September, China's spot price of Q235B 4.75mm HRC in Shanghai under Mysteel's assessment had declined by 3.9% on month to average Yuan 3,126/tonne ($442.7/t) including the VAT, the lowest monthly average in seven years.
Entering October, the improved sentiment will buoy the country's steel market including that for HRC, Mysteel's report notes.
In late September, the central government had announced a series of stimulus policies aimed at boosting economic growth, which bolstered market confidence including that for steel, as reported.
Meanwhile, HRC demand is likely to enjoy a recovery this month in both the domestic market and overseas, the report suggests.
Domestically, the home appliance industry – one of the major consumers of hot coils – may perform relatively strongly in October and thus give a fillip to HRC usage.
This month, the total scheduled production of China's three most popular home appliances – air-conditioners, refrigerators and washing machines – is predicted to rise by 10.1% on month to 28.63 million units, according to ChinaIOL.com, a leading domestic information provider for the home appliance and refrigeration industries.
Meanwhile, HRC use in the machinery sector is also expected to pick up moderately, as many construction companies in North China will be rushing to finish projects by year-end before the winter cold arrives, giving a lift to sales of yellow goods, Mysteel's report indicates.
This month, China's apparent consumption of hot coils may grow by 1.6% from September to average 3.18 million tonnes per week, Mysteel's report estimates.
In overseas developments involving for hot rolled coils, Vietnam – a major consumer of Chinese HRC – has opened a window for a possible rise in Chinese exports this month. Hanoi in mid-July had launched an anti-dumping (AD) investigation into Chinese HRC, as reported, and has recently extended the deadline for the submission of documents by the targeted Chinese mills to October 16.
This might see more Chinese HRC exported to Vietnam ahead of the possible imposition of AD tariffs, the report suggests.
As for supply, the increase in prices and profitability of hot coils this month could see a slight recovery in production, the report indicates, saying that average HRC output in October may rise 1.7% from September to reach 3.08 million tonnes per week.
Source:Mysteel Global
