Posted on 03 Mar 2026
Hot-rolled coil (HRC) production among the 37 Chinese steelmakers regularly surveyed by Mysteel nudged down by 2,000 tonnes or a minimal 0.06% on week to stay around 3.1 million tonnes during February 19-25, the latest survey results showed.
The dip shouldn't surprise as the survey period partly coincided with this year's Chinese New Year (CNY) break that began on February 15 and ended on February 23 when most integrated steelmakers produced as normal while the rest of China holidayed.
Their steady production during the break and the slow recovery in demand for their coils led some steel mills to ease back on production during the sample week due to elevated stocks in their yards, according to survey respondents. Some manufacturing firms don't intend restart their operations until after China's Lantern Festival that this year falls this Wednesday.
The survey findings show that operational rates during the survey period among the sampled mills retreated by 1.55 percentage points from the pre-holiday week to average 78.13%, while their HRC rolling capacity utilization rate edged down by 0.05 percentage point on week to 79.1%.
Meanwhile, some steel mills in North China have been told to cut their blast furnace operations by no less than 30% over March 4-11 to ensure clear air over Beijing for delegates arriving in the capital for this year's 'Two Sessions' political meetings beginning on March 4 and March 5, as Mysteel Global has reported. This may also slow down the pace of supply recovery in the steel market, sources noted.
On the other hand, hot coil inventories were seen mounting further at steel mills and traders' warehouses during the survey period.
By February 26, hot coils stored in the 194 commercial warehouses in the 55 Chinese cities Mysteel monitors had swelled by 6.6% or 304,800 tonnes to a 17-month high of 4.9 million tonnes. Similarly, HRC inventories held by the surveyed mills had also climbed by 1.5% or 14,000 tonnes on week to 947,800 tonnes as of the same day, the highest since February 7 last year.
As demand is yet to fully recover, hot coil inventories are expected to rise further in coming weeks until late March, when the inventory curve may reach an inflection point, market sources predict.
Pressure from the high stocks continued to nudge HRC prices lower last week. On February 27, Mysteel assessed the national price of Q235 4.75mm hot coils at Yuan 3,268/tonne ($475/t) including the 13% VAT, down by Yuan 11/t or 0.34% from pre-holiday level.
In line with the overall downtrend in spot prices for hot coils, on February 27 the most traded HRC contract for May delivery on the Shanghai Futures Exchange (SHFE) also closed lower by Yuan 8/tonne or 0.25% from the settlement price of February 13, the last trading day before the CNY holiday.
However, as China's Two Sessions meetings approach, this, combined with the escalated Middle East tensions after US and Israel's attacks on Iran over the weekend, could prompt steel prices to firm in the near term, industry watchers forecast.
In the SHFE's morning session on March 2, the most traded HRC contract closed 0.16% higher than the prior trading day's settlement price, the bourse's data showed.
Source:Mysteel Global
