MONTHLY: China's HRC prices may see limited decline in Dec'24

Mysteel Global: Hot-rolled coil (HRC) prices in China are expected to decrease this month as domestic demand for coils wanes, Mysteel's latest monthly report on the flat product suggests. The price drop is likely to be limited, though, thanks to the resilience of overseas HRC demand.

During November, supply and demand for HRC were relatively strong compared with fundamentals for other carbon steel items such as construction steel. However, the flat segment was not totally immune to the pressure the usual winter slowdown in steel demand is exerting on the broader ferrous market, the report notes.

Last month, China's spot price of Q235B 4.75mm HRC in Shanghai under Mysteel's assessment slipped by 1.53% on month to average Yuan 3,478/tonne ($477.75/t) including the VAT.

Entering December, HRC supply will stay relatively liquid as many steelmakers plan to divert their hot metal from producing rebar to coils, which they view as offering better business prospects. Construction steel products such as rebars, H-beams and sheet piles are more affected by the seasonal demand lull in winter, the report explained.

Average HRC output per week this month is expected to remain largely flat from November at around 3.09 million tonnes, according to Mysteel's report.

On the other hand, the relatively strong domestic demand for hot coils may not continue this month, where orders will gradually weaken, the report warned.

Replenishment demand for hot coils from the manufacturing sector - a major consumer of HRC - has been gradually slowing, and inquiries for HRC from the infrastructure sector have also been tapering off as most infrastructure construction projects are now in their final stages to ensure completion by year's end.

However, strip mills suffering from the downtrend in domestic hot coil demand may find some relief from the export market, Mysteel's report observed.

The decrease in domestic hot coil prices has carried over into export prices as well, giving Chinese makers a price advantage in the international steel market, the report notes.

Meanwhile, some Chinese exporters of finished products such as home appliance manufacturers are looking to seize more overseas trading opportunities in anticipation of higher tariffs being applied next year in key markets such as the United States. This trend is indirectly boosting export demand for hot coils, the report added.

In December, the scheduled export volume of Chinese air-conditioners and refrigerators is expected to jump by 17% from November's planned exports to reach about 15.05 million units, according to an estimate compiled by ChinaIOL.com, a leading domestic information provider for the home appliance and refrigeration industries.

Another possible positive factor for the commodity this month relates to the convening of the annual Central Economic Work Conference in Beijing, where Chinese leaders will decide economic priorities for 2025. Market participants are hoping that additional incentive policies will be introduced to lift the economy.

Any new package of measures will give new confidence to the country's steel market and buoy ferrous prices, including those of HRC, though the effects may be short-lived, as reported.

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