China's HRC prices hit 1.5-month high

China's hot-rolled coil (HRC) prices rose further to touch a 1.5-month high over November 28-December 5, mainly due to better market sentiment, a market insider said.

The spot prices of Q235 4.75mm HRC under Mysteel's assessment increased by Yuan 106/tonne ($15.2/t) on week to Yuan 4,008/t including the 13% VAT as of December 5.

The improved macroeconomic environment gave a boost to market sentiment, which in turn lent some support to spot HRC prices, a Shanghai-based analyst said. Besides, most traders tended to lift their offering prices after noting the rise in the HRC futures prices on the SHFE.

The most-traded HRC May contract on the Shanghai Futures Exchange (SHFE) closed the daytime trading session at Yuan 3,914/t on December 5, up by Yuan 172/t from the settlement price of November 28, according to the exchange's data.

Some mills in North and East China resumed production after finishing maintenance works on their steelmaking facilities, resulting in a rise in HRC output, the analyst said.

Over November 24-30, production of hot coils among 37 Chinese steelmakers under Mysteel's survey stood at 3 million tonnes, up by 87,500 tonnes or 3% on week, which also led their hot-rolling capacity utilization rate to grow by 2.24 percentage points on week to 73.79% as of November 30.

Demand for HRC from end-users picked up marginally with the strengthening of HRC prices and China's optimization to COVID control measures, she added.

HRC inventories held by these surveyed mills dropped by 37,800 tonnes or 4.5% on week to 800,700 tonnes as of November 30. And HRC stocks at trading houses across 33 Chinese cities under Mysteel's tracking slipped by 38,200 tonnes or 1.9% on week to 2 million tonnes as of December 1.

Written by Villanelle Xia, xiayi@mysteel.com

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