China's HRC prices strengthen on optimistic market sentiments

The domestic price of Q235 4.75mm hot-rolled coil (HRC) across China increased by Yuan 43/tonne ($6.3/t) on week to reach Yuan 4,033/t including the 13% VAT as of September 4, according to Mysteel's assessment, thanks to optimistic sentiment despite higher stocks and production of coils.

"Most traders believe that prices will increase as end-user demand picks up in the coming few months," a Shanghai-based steel analyst said, indicating that some downstream manufacturers would step up production as summer ends.

However, the high levels of supply continued to dampen prices. HRC production among 37 Mysteel's surveyed flat steelmakers stayed high at 3.3 million tonnes over August 27-September 2, being up another 9,700 tonnes on week, Mysteel's survey showed.

Accordingly, the rolling capacity utilization rate among those mills also edged up by another (albeit tiny) 0.01 percentage point on week to average 84.33% over the same period, according to the survey.

The stocks of hot coil held by traders in China's 33 cities increased by 80,800 tonnes or 3.1% on week to 2.73 million tonnes as of September 3, or some 12.8% higher on year, Mysteel's data showed.

"Over the past few months the demand for flat steel has been steady, even though we're in the midst of the slack consuming season," a Beijing-based analyst said, pointing out that stock levels are not very high considering the loose domestic supply and increasing imports.

The analyst pointed out that demand from downstream industries like the auto, home-appliance and container manufacturing industries was good, and the operation resumption globally would also serve to further drive up demand, according to him.

The inventories of HRC held by the 37 sampled mills, however, saw an on-week decline of 10,400 tonnes to reach 1.2 million tonnes as of September 2, as the stocks at mills were moderately passed to traders.

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

Photo: World Steel