China's HRC output eases by 3.3% on week

Production of hot-rolled coils (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors totalled 3.05 million tonnes during the week of February 18-23, easing by 104,300 tonnes or 3.3% on week, the results of the latest weekly production survey show. February 18 was the first working day in much of China after the Chinese New Year (CNY) holiday officially ended on February 17, Mysteel Global notes.

In tandem, the hot-rolling capacity utilization rate among the 37 mills also moved lower by 2.66 percentage points on week to average 77.97% last week, the survey found.

Some steel producers in North China conducted maintenance on their steelmaking facilities during the survey period, resulting in the on-week decline in HRC output, survey respondents noted.

Meanwhile, logistics services have gradually returned to normal after the CNY break, allowing many steelmakers to resume making deliveries at pre-holiday levels.

These factors together led the rise in HRC stocks at 37 surveyed mills to slow during the survey week, with the tonnage mounting by just 1.15% on week to sit at 987,000 tonnes, compared with the previous week's 14.3% jump.

On the other hand, most downstream users still hadn't returned to the market when the survey was taken, indicating the weak recovery of HRC consumption, respondents added.

Also, by February 22, inventories of the flat product at commercial warehouses in 33 cities under Mysteel's tracking had continued to climb, rising by another 13.14% on week to reach 3.29 million tonnes.

Regarding prices, Chinese prices of hot coils in both the spot and futures markets fell last week. As of February 23, the spot price of Q235 4.75mm hot-rolled coil under Mysteel's assessment was at Yuan 4,056/t ($563.5/t) including the VAT, declining by Yuan 52/t or 1.27% from February 18.

On the Shanghai Futures Exchange the same day, the most-traded HRC futures contract for May delivery closed the daytime trading session at Yuan 3,905/t, decreasing by Yuan 70/t or 1.76% from the settlement price on February 19, the exchange's first trading day after the CNY break.

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and BigMint.