Posted on 28 Nov 2023
Production of hot-rolled coil (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors reached 3.2 million tonnes during November 20-24, rising further by a larger 114,700 tonnes or 3.7% on week, according to Mysteel's weekly production survey.
Accordingly, the hot-rolling capacity utilization rate among the 37 mills had also moved higher by another 2.93 percentage points on week to average 81.73% during the period, the survey results showed.
Many Chinese steel mills resumed or cranked up their hot coil production after seeing their profit margins swell, survey respondents noted, attributing the profit recovery to improved market sentiment recently and rebounded HRC prices.
For example, as of November 24, China's national price of Q235 4.75mm HRC was assessed by Mysteel at Yuan 4,035/tonne ($564/t) including the 13% VAT, up by another Yuan 12/t on week. Similarly, on the Shanghai Futures Exchange, the most-traded HRC futures contract for January delivery also rose by another 0.35% from the November 17 settlement price to close the daytime trading session at Yuan 4,054/t on November 24.
In parallel, the improved weather in North China and steady demand in South China together saw hot coil stocks continue to fall during the survey week, with HRC stocks at commercial warehouses in the 33 cities under Mysteel's tracking declining by 3.2% on week to sit at 2.56 million tonnes as of November 23.
Nevertheless, end-user demand for hot coils will remain tepid overall in winter, a traditional off-season for steel consumption in China, survey respondents warned, adding that many end-users still hold a wait-and-see stance about the high-priced flat steel.
On the other hand, rising hot coil output contributed to the increase of inventories held by the 37 surveyed mills, with the tonnage moving higher by another 1.8% on week to reach 887,800 tonnes as of November 23, Mysteel's survey showed.