Posted on 02 Sep 2020
China’s price of Q235 4.75mm hot-rolled coil (HRC) declined by Yuan 13/tonne ($1.9/t) on week to Yuan 3,990/t including the 13% VAT as of August 28, Mysteel’s data showed, as sentiment softened given the static demand and pressure from higher production.
HRC futures prices showed a similar trend, with very little rising momentum during the past week, according to a Shanghai-based market insider. Consequently, sentiment in the physical market softened and some traders in East China opted to slightly reduce offer prices to boost sales. However, most end-users just procured to satisfy their immediate requirements, he told Mysteel Global.
The most-traded HRC futures contract on the Shanghai Futures Exchange for October delivery had inched up by only Yuan 4/t from the settlement price on August 21 to reach Yuan 3,965/t when the daytime session ended on August 28.
Production among 37 Mysteel’s sampled flat steelmakers rose by a tiny 3,400 tonnes on week over August 20-26 to hover high at 3.3 million tonnes. In parallel, the rolling capacity utilization rate among those mills also inched up 0.09 percentage point on week to 84.32% over the same period. The high levels of production weighed on both sentiment and prices.
The rise in production saw hot coil stocks held by those mills move up 21,200 tonnes on week to 1.2 million tonnes as of August 26, but inventories held by traders in 35 cities decreased by 30,000 tonnes on week to 2.65 million tonnes as of August 27, Mysteel’s survey showed.
Despite the decline in stocks held by traders, actual sales were essentially static last week, a market source said. “Traders in South China sold fewer products last week as end-users remained cautious about procurement when the prices were decreasing,” the source said. “But I’ve heard since that a few local traders are stocking up,” he told Mysteel Global.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
