China's HRC prices recover after long holiday
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China's national price of the Q235 4.75mm hot-rolled coil (HRC) recovered by Yuan 60/tonne ($6.8/t) from September 30 to Yuan 3,937/t including the 13% VAT as of October 10, mainly thanks to the post-holiday buying, according to Mysteel's latest survey.
The price had returned to the uptrend after the long National Day holiday over October 1-8, as "spot market sentiment has obviously improved on good sales seen over and after the holiday, and end-users have been replenishing stocks while some trading has been more for price gambling," a Shanghai-based market source said, "and we may see stocks drop this week or in the near future," he added.
By October 8, HRC inventories at the trading houses in China's 33 cities reversed up to 3.1 million tonnes, some 231,800 tonnes or 8.2% higher than that on September 30, and stocks at the 37 Chinese mills also rebounded 84,900 tonnes or 7.1% from September 30 to 1.3 million tonnes, Mysteel's surveys showed.
The inclines in HRC stocks were in the context of lower production, as the output among the 37 mills reversed down 45,000 tonnes or 1.3% from that over September 24-30 to 3.36 million tonnes over October 1-7, and the hot-rolling capacity utilization rate also retreated 1.15 percentage points in tandem to 85.76% on average over the period, according to Mysteel's tracking.
These steel mills had reined in their output but just marginally on witnessing the softening in the domestic HRC price, and the market dissatisfaction at the less-than-expected domestic steel consumption throughout September, Mysteel Global noted.
However, "the room for further production decline in near term will be very limited, as steelmakers are still with positive HRC margins though thinner, and both the prices and demand seemed to have been on the track of recovery starting early October," the market source commented.
The HRC margin among China's 91 blast-furnace steelmakers averaged Yuan 21/t in September, or down Yuan 99/t from August, as reported.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
