Posted on 24 Mar 2021
China’s price of Q235 4.75mm hot-rolled coil (HRC) strengthened for the fourth successive weeks over March 15-19 or ever after Chinese New Year holiday, gaining another Yuan 25/tonne ($3.8/t) to Yuan 4,993/t including the 13% VAT as of last Friday, as demand had been steady while production had been declining.
HRC production among China’s 37 steel mills under Mysteel’s weekly survey declined for the fourth week by another 47,800 tonnes or 1.5% on week to about 3.1 million tonnes over March 11-17, the hot rolling capacity utilization rate among the mills, thus, reduced by 1.22 percentage points on week to 78.58% on average over the same period, according to the latest survey.
Lower output while firm demand saw the HRC stocks at these mills down for the fourth week by 93,200 tonnes or 7.7% on week to 1.1 million tonnes as of March 17, and the volume at the commercial warehouses in China’s 33 cities also dropped, down for the second week by 145,100 tonnes or 4.6% on week to about 3 million tonnes as of March 18, according to Mysteel’s survey.
In the near term, though, the relatively high HRC price has dented the enthusiasm of the domestic buyers. “End-users’ demand is real, but the high prices have make them rather cautious, buying only what they need,” a steel trader in South China’s Guangdong province said.
China’s HRC prices, however, “are unlikely to head south in the near term, as the long-standing restrictive measures on steel operations in Tangshan will reduce output of many finished steel products, and at the same time, Beijing’s tightening control over carbon emission from the steel industry will curtail output too,” a Shanghai-based futures analyst said.
A second Shanghai analyst echoed the projection. “The ongoing curbs in Tangshan may see the local HRC production down 1.1 million tonnes/month,” he stated, adding that Tangshan contributes to about 5% of the country’s total HRC output, and the curbing on 23 steel mills in Tangshan, North China’s Hebei province, will be running till the end of this year.
He, however, pointed out the adverse impact of the tax rebate adjustment on HRC. “If the rebate will be cut to 9% from the 13% at present, the market will stabilize in a short period of time, but a total removal will seriously reduce exports, adding supplies to the domestic market and pressuring the domestic prices,” he warned.
Source:Mysteel Global
