Posted on 05 Jun 2025
After a volatile May in which domestic prices of hot rolled coils (HRC) enjoyed a brief uptick before ending the month at a 13-month low, June will likely see prices decline further but at a more sedate pace, Mysteel's latest monthly report on the commodity suggests, with supply-side growth becoming a more obvious worrying factor.
Although the de-escalation of trade tensions between China and the U.S. in mid-May had given a lift to sentiment in China's steel market, weakened end-user demand for steel products as summer was approaching eventually impacted the market for hot coils last month, the report observed.
By May 30, China's spot price of Q235B 4.75mm HRC in Shanghai under Mysteel's assessment registered Yuan 3,170/tonne ($441/t) including the VAT, the lowest the price has been since late September 2024.
Hot coil demand may stay lackluster this month as June is usually another slow month for steel consumption in China with its high temperatures and frequent rains. However, demand for coils will most likely ebb steadily rather than decline sharply, the report suggested.
In China's domestic market this month, HRC demand from the manufacturing sector is expected to be relatively steady as firms in end-user industries such as automobile and home appliance manufacturing are likely to maintain their HRC purchases to meet their immediate production needs. China's apparent consumption of hot coils may slip by just 0.1% from May to average 3.2 million tonnes per week this month, Mysteel's report predicts.
Meanwhile, falling domestic HRC prices and a bearish outlook for export due to trade friction have prompted some coil producers and traders to rush to seize trading opportunities abroad before higher tariffs become a factor once more, the report added.
On the supply side, however, increasing hot coil production is likely to undermine the market this month.
Many HRC makers conducted maintenance on their hot strip mills in May, resulting in both low production and inventory levels. By end-May, total HRC inventories held by the 37 Chinese flat steel producers and by traders at commercial warehouses in 33 Chinese cities Mysteel regularly surveys had declined by 9% on month to sit at 3.33 million tonnes.
HRC producers are likely to resume or even expand their production in June due to relatively healthy profit margins they can earn and low inventory levels. Average HRC output among the 37 sampled HRC makers is estimated to rise by 3.5% on month to average 3.25 million tonnes per week in June, also higher than the average tonnage of 3.18 million tonnes so far this year, the report predicts.
Source:Mysteel Global
