Posted on 09 Nov 2022
Total production of hot-rolled coil (HRC) among 37 Chinese flat steelmakers under Mysteel's tracking touched a one-month low of 3.08 million tonnes over October 27-November 2, or having declined for the second week by another 36,300 tonnes or 1.2% on week.
Meanwhile, the surveyed mills' hot-rolling capacity rate also slipped by 0.9 percentage point on week to 78.7%, Mysteel's data showed.
Some mills in East China conducted maintenance works on their steelmaking facilities, which led to the decline in output, a Shanghai-based analyst said. And with the strengthening of HRC prices on Shanghai Futures Exchange (SHFE), many traders lifted their offering prices accordingly, he added.
China's domestic price of Q235 4.75mm HRC under Mysteel's assessment gained Yuan 53/tonne ($7.3/t) on week to Yuan 3,814/t including the 13% VAT as of November 7.
In the futures market, the most-traded HRC January contract on the SHFE closed the daytime trading session at Yuan 3,618/t on November 7, up by Yuan 124/t or 3.5% from the settlement price of October 31, the exchange's data showed.
However, most traders still opted to offload some tonnage to reduce risks, as steel demand is seen softening with the approach of slack season for HRC consumption and the resurgence of COVID-19 cases nationwide, the analyst commented.
HRC inventories held by the surveyed 37 mills grew by 20,200 tonnes or 2.4% on week to 859,900 tonnes as of November 2, while HRC stocks at trading houses across 33 Chinese cities under Mysteel's tracking thinned by 128,200 tonnes or 5.2% on week to 2.3 million tonnes as of November 3.
The analyst predicted that Chinese HRC prices are likely to slip this week, as some mills are willing to compromise on prices, given their high stocks at plants. Besides, the mismatch between supply and demand may also weigh on HRC prices.
Source:Mysteel Global
