The price of hot-rolled coil (HRC) price in China's physical market under Mysteel's assessment reached a 16-month low last week mainly due to sluggish demand from end-users and bearish market sentiment market sources shared.
The price of Q235 4.75mm HRC plunged by Yuan 235/tonne ($35.2/t) on week to a 16-month low of Yuan 4,662/t including the 13% VAT as of June 17.
With the softening in HRC prices on Shanghai Futures Exchange last week, the market sentiment turned bearish accordingly. Most end-users took on a cautious stance of buying, while traders trimmed their offering prices so as to boost some sales, but the spot trading volume was still lackluster, a Shanghai-based source shared.
Some mills cut down their production or conducted maintenance stoppages last week, given the negative profits they could currently earn amid the continuously falling spot HRC prices and high production costs, the source added.
The production of hot coil among 37 steelmakers under Mysteel's survey reversed from one week of recovery last week, falling by 135,500 tonnes or 4.1% on week to 3.2 million tonnes over June 9-15, while the rolling capacity rate at these surveyed mills also dropped by 3.46 percentage points on week to 80.55% as of June 15.
Some mills slowed down their production with few orders at hand and accelerated the pace of delivery, resulting in the decline in their stocks, the source noted. As such, HRC inventories held by these mills had slipped for the third week by another 19,200 tonnes or 2.1% on week to 888,200 tonnes as of June 15, according to Mysteel's assessment.
However, the volume at trading houses Mysteel surveyed across 132 cities surged by 65,900 tonnes or 2.5% on week to 2.7 million tonnes as of June 16.
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