Posted on 30 Mar 2021
China’s domestic price of Q235 4.75mm hot-rolled coil (HRC) reached Yuan 5,123/tonne ($781/t) as of March 26, being up Yuan 130/t on week and touching a new high since July 2010 when Mysteel first launched the price survey. Behind the rise was mainly due the pick-up in sales, plus the sustained market optimism for hot coils, sources said.
“Domestic sales improved overall, especially in North and South China, and consumers seem to be a bit more willing to accept the high prices, given the optimistic market expectations,” a Shanghai-based analyst said, adding that both the stocks and production levels remain low.
HRC inventories held by traders in the 33 cities Mysteel tracks declined for the third week last week, falling by another 140,300 tonnes or 4.7% on week to 2.8 million tonnes as of March 25, or some 29.4% lower on year.
However, the hot coil stocks held by 37 steelmakers under Mysteel’s survey inched up 24,200 tonnes or 2.2% on week to 1.1 million tonnes as of March 24, but the volume was still 22.9% lower on year.
The rises in mill inventories was largely due to the rebound in production, given the higher profits available on HRC, as well as the completion of major maintenance, Mysteel Global noted.
Hot coil output among those 37 steelmakers rose by 195,100 tonnes or 6.3% on week to nearly 3.3 million tonnes over March 18-24, though still lower than the level of 3.3-3.4 million tonnes over January to February. Nonetheless, their rolling capacity rate also moved up 4.98 percentage points on week to 83.56% over the same period.
“But the scope for further rises in output is limited as steelmakers in Tangshan will stick to their production schedules each month. Consequently, the price might hover high soon in the Yuan 5,100/t to Yuan 5,200/t range,” the analyst added.
The rapid rise in steel prices and the softening of raw materials prices saw the makers’ profits widen, sources note. The HRC price has surged 7.7% from March 1 while the Mysteel SEADEX 62% Australian Fines price dropped 7.6% over the same period, according to Mysteel’s database.
Source:Mysteel Global
