China's HRC output rises to 4-month high

Over January 6-12, total production of hot-rolled coil (HRC) among the 37 Chinese flat steelmakers under Mysteel's tracking reached a four-month high of 3.1 million tonnes, mainly due to the production resumption among steel mills, according to market sources.

During the latest survey period, HRC output gained 56,200 tonnes or 1.8% on week, and the rolling capacity utilization rate among these surveyed mills grew accordingly by 1.44 percentage points on week to 79.57%, as most mills in North and Northeast China had resumed their production after maintenance stoppages, a Shanghai-based source shared.

The demand for HRC continued shrinking as both traders and end-users and were cautious about procurement with only a few days away from the Chinese New Year (CNY) holiday over January 31-February 6, he added.

As of January 14, China's domestic price of Q235 4.75mm HRC under Mysteel's assessment increased by Yuan 46/tonne ($7.2/t) on week to 4,864/t including the 13% VAT.

In line with the rising spot HRC price, the most-traded May 2022 HRC contract on the Shanghai Futures Exchange gained by Yuan 127/t from the settlement price of January 7, closing the daytime trading session at Yuan 4,772/t on January 14.

The HRC prices are expected to soften in the near term, as stocks at the commercial warehouses are likely to mount amid sluggish demand yet stable supply, according to the source.

Hot coil stocks held by the 37 steelmakers under Mysteel's survey reversed from six weeks of declines, edging up by 3,000 tonnes on week to 797,500 tonnes as of January 12. The growth in supply was mainly contributed by those steel producers in Northwest China, the source shared.

Meanwhile, hot coil stocks at the commercial warehouses in the 33 Chinese cities under Mysteel's survey declined by 12,100 tonnes or 0.5% on week to 2.2 million tonnes as of January 13.

Written by Villanelle Xia, xiayi@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.