Posted on 12 Apr 2021
Hot-rolled coil prices in China’s domestic physical market are expected to rise further this month and then stabilize, supported by market optimism as well as firm demand, according to Mysteel’s latest monthly report. But the rapid rises in prices are applying huge pressure to end-users, especially among manufacturers, respondents warned.
China’s price of Q235 4.75mm HRC assessed by Mysteel had surged by Yuan 480/tonne ($73.3/t) from end-February to Yuan 5,341/t including the 13% VAT as of March 31. A week later, the price had increased further to Yuan 5,615/t as of April 6, refreshing its new record high since July 2010 when Mysteel inaugurated the survey.
The rise in HRC futures prices throughout March amid optimistic sentiment and the strengthening demand saw physical HRC prices enjoy great support too last month, the report said. The performance of flat steel was better than long steel, with the price index of HRC up 11% on month by April 1 while that of rebar had only gained 4.9%.
The strength seen in HRC prices compared with rebar resulted mainly from the drops in production due to maintenance and steel production cutbacks in Tangshan in North China’s Hebei province, as well as the substantially lower level of stocks compared with 12 months earlier, according to the report.
Weekly HRC output among Mysteel’s 37 sampled steelmakers ranged from 3 million tonnes to 3.3 million tonnes over March, with the lowest record that month being 3.08 million tonnes – the March 11-17 average. This compares with the February result where weekly production fluctuated within a range of 3.25-3.4 million tonnes.
As of April 1, total HRC stocks held by traders in 33 cities Mysteel’s surveys had dropped 15.4% on month or by 31.5% on year to 2.7 million tonnes. In parallel, the stocks at those 37 steelmakers also moved down 13.7% on month or 23.1% on year to nearly 1.1 million tonnes as of March 31.
Mysteel predicts that expanding profit margins will encourage the mills to step up production this month, but the high-level prices might be unacceptable to end-users. Home appliance manufacturers have raised their product prices recently, but they risk meeting consumer resistance if they push ticket prices of white goods too high, sources said.
Source:Mysteel Global
