Posted on 07 Jan 2025
China's hot-rolled coil (HRC) market will continue to come under pressure this month due to increasing supply and weakening domestic demand, Mysteel's latest monthly report suggests. However, the downward momentum is expected to remain moderate this month, as steady overseas demand for the Chinese flat product may provide some relief.
Overall demand for hot coil had remained resilient in December, lending support to prices, the report notes. Last month, China's spot price of Q235B 4.75mm HRC in Shanghai under Mysteel's assessment had dipped by just 0.2% on month to average Yuan 3,470.9/tonne ($473.6/t) including the VAT.
HRC supply is expected to increase this month, as many steelmakers completed their year-end maintenance in December and are gradually ramping up operations.
Additionally, HRC exhibits better liquidity and profitability compared with construction steel, which is more heavily affected by the winter demand drop. As a result, many mills prefer diverting their hot metal from producing rebar to HRC, the report adds.
Average HRC output per week in January is forecast to increase by 40,000 tonnes or 1.3% on month to reach about 3.18 million tonnes, according to Mysteel's report.
On the demand side, China's HRC consumption from its major consuming sector, manufacturing, is projected to decline this month, the report notes.
Industrial end-users such as home appliance makers and automotive manufacturers had already ramped up production in December to meet year-end sales targets.
For example, the scheduled production of China's three most popular home appliances – air-conditioners, refrigerators and washing machines – is predicted to decrease by 5.2% from December to total 32.22 million units this month, according to ChinaIOL.com, a leading domestic information provider for the home appliance and refrigeration industries.
Meanwhile, with the eight-day long Chinese New Year holiday to officially begin at the end of January, many manufacturing enterprises will halt operations in the latter half of this month to enjoy the break, the report explains.
This month, China's apparent consumption of hot coils may slide by 4.5% from December to average 3 million tonnes per week, Mysteel's report estimates.
Nevertheless, the increase in production and the modest decline in domestic demand are unlikely to cause a sharp drop in HRC prices this month. Overseas demand remains relatively stable, and thanks to the continued price advantage enjoyed by Chinese hot coil abroad, many domestic steel mills are expected to enjoy stable HRC orders for January, Mysteel's report concludes.
Source:Mysteel Global
