China HRC Price Hits 33-Month Low, Sentiments Bearish

Mysteel's Chinese national average benchmark price for the Q235 4.75mm HRC declined to a new low since June 21, 2017, as of March 27, hitting Yuan 3,471/t including the 13% VAT, as the market has been enveloped by great pessimism amid the concern on the domestic demand and the uncertainties in both China's and global economies, according to market sources.

-- The price reversed down by Yuan 50/tonne ($7/t) or 1.4% over March 23-27, as "downstream demand for both HRC and cold-rolled coil have shown signs of recovery recently, but it has been by no means as strong as expected," a Shanghai-based steel analyst commented.

-- "Besides, downstream industries such as automobile and home appliance manufacturers are still holding a rather bearish view of the demand for such products and flat steel in the coming months especially in the export market with the COVID-19 spreading much faster and wider than expected with the U.S. and the EU in particular," he added.

-- Chinese steel mills have been consciously curtailing their HRC output, and over March 19-25, HRC production among 37 flat steelmakers under Mysteel's weekly survey kept declining after Chinese New Year holiday, losing another 1.6% on the week or down 7.3% on month to about 3 million tonnes, or a new low since late December 2017, and their HRC rolling capacity utilization rate, thus, dropped to its 27-month low of 76.05%, after a further on-week decline of 1.24 percentage points.

-- These mills' HRC stocks, thus, declined for the fifth week over March 19-25 by another 5.5% on the week to 1.5 million tonnes, and the HRC stock at the traders in the 33 Chinese cities also decreased for the second week over March 20-26 by 0.7% on the week to 4 million tonnes, according to Mysteel's surveys.

-- Steel traders, nevertheless, are still under the pressure of relatively high finished steel stocks and tightness in cash flow, especially when their HRC stocks had been declining at a slower pace than steel mills, which may prompt them to still focus on destocking even if they have to compromise on offering prices.

~ This article has been published under an article exchange agreement between Mysteel Global and SteelMint.