WEEKLY: China’s HRC price firm, exceeds rebar price
Source: Mysteel
Aug 04, 2020 17:30
“Output of HRC is comparatively lower than rebar and it has lower sensitivity to seasonal factors, as sales of coils are mostly on long-term contract. These contributed to hot coil prices strengthening recently,” an official from a steel mill in North China noted.
HRC production among the 37 Chinese steelmakers sampled by Mysteel declined by 36,300 tonnes or 1.1% on week to 3.26 million tonnes over July 23-29, or only 0.9% higher on year. However, rebar production over the same period among 137 long steel mills was 2.5% higher on year, though reversing down from its historical high at 4 million tonnes one month ago, Mysteel’s data showed.
Accordingly, rolling capacity utilization for HRC among those 37 mills also decreased by 0.93 percentage point on week to 83.4% on average over July 23-29.
“The higher HRC price in the global market recently, thanks to the gradual resumption of economic and industrial activities internationally, has been boosting China's domestic HRC prices too,” the official added.
The decline in production mitigated pressure on stocks held by the 37 mills, with stocks declining 1.35% on week to 1.1 million tonnes as of July 29. However hot coil inventories in commercial warehouses in the 33 cities Mysteel monitors increased for the fifth week by another 1.5% on week to 2.76 million tonnes as of July 30.
However, prices in East China are firmer than those in other regions, as HRC supply in this market is limited and traders were intent on holding on to prices, especially when futures prices were strong, according to a Shanghai-based analyst.
“However, the price in South China was undermined by imports and by products from North China where demand is mediocre,” he added.
The Q235 4.75mm HRC price in East China’s Shanghai reached Yuan 4,070/t as of August 4, while prices of the same coil in North China’s Beijing and South China’s Guangzhou were at Yuan 3,900/t and Yuan 4,000/t respectively, all including the 13% VAT.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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