China's HRC output, demand to climb in 2022- Mysteel

Production and apparent consumption of carbon-steel hot-rolled coil (HRC) in China will both climb in 2022, edging up by 2.2% and 2.3% on year respectively, Mysteel predicts in its newly-published forecast for the product. Hot coil prices may retreat further however, the report warned.

During the coming year, Chinese production of HRC will increase to 254.9 million tonnes - from the 249.4 million tonnes predicted for this year - as the country's hot strip mill capacity is expected to grow by 10.9-17.9 million tonnes/year. Southwest China will host most of the additional HRC capacity coming on stream in 2022, the report said.

As for HRC demand, China's apparent consumption of these coils is seen growing to 254.8 million tonnes for 2022. Hot coil orders from the manufacturing industry are likely to pick up next year while demand for coils for use in infrastructure projects will be steady or trend downward, the report noted.

Amid the uptick in both production and demand, Chinese HRC prices are seen growing in the first quarter of 2022, before trending downward for the remainder of the year, Mysteel predicts. The average price of Q235 4.75mm HRC will be Yuan 4,483/tonne ($704/t) including the 13% VAT, lower by 16.2% on the year.

Throughout 2021, HRC prices travelled in a reverse V-shape, growing steadily during this year's January-June half, mainly underpinned by shrinking supply, as well as robust demand from both domestic and overseas customers. However, the price progressively softened during this year's second half as domestic demand had been fulfilled in advance during H1 while export volumes declined as the global economy began slowing from the resurgence of COVID outbreaks and shortages of manufacturing inputs, Mysteel noted.

The price of Q235 4.75mm HRC had surged by 46.1% from January 4 to Yuan 6,737/t as of May 12 including the 13% VAT, a new high since Mysteel started to compile the data in July 2010, before retreating to Yuan 4,790/t as of December 29, according to Mysteel's assessment.

~ Written by Villanelle Xia, xiayi@mysteel.com

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