China's hot-rolled coil output at 6-year low

Production of hot-rolled coils (HRC) among the country's 37 flat steelmakers Mysteel tracks decreased for the second week over November 25-December 1 to 2.8 million tonnes, a new low since Mysteel started to compile the data in May 2015.

During the survey week, HRC output declined by another 112,900 tonnes or 3.9% on week, while average rolling capacity utilization among these mills declined accordingly by 2.89 percentage points on week to 71.69%, the data show.

Some steelmakers in North and East China conducted maintenance work on their hot strip mills last week, which led to the sharp fall in HRC output, a Shanghai-based source said.

The decline in output lent some support to domestic HRC prices, the source added. Over November 29-December 3, China's domestic price of Q235 4.75mm HRC under Mysteel's assessment increased for the second week by another Yuan 12/tonne ($1.9/t) on week to Yuan 4,809/t including the 13% VAT.

With the recovery in HRC prices, spot trading was active last week compared with the previous week, but still dull in general. Most end-users were inactive in buying, and traders were reluctant to take much tonnage given the relatively high prices, despite most having low stocks at hand, the first source said.

Hot coil stocks held by the 37 steelmakers under Mysteel's survey declined for the first time in three weeks, falling by 33,200 tonnes or 3.6% on week to 902,000 tonnes as of December 1. This was because most mills opted to accelerate deliveries in the absence of any clear sign of a recovery in prices, a second Shanghai-based source said.

Meanwhile, hot coil stocks at the commercial warehouses in the 33 Chinese cities under Mysteel's survey reached a 10-month low of 2.4 million tonnes by December 2, dipping by another 2,100 tonnes or 0.1% on week. Most traders were willing to sell off some stocks to minimize their risks, the first source added.

Given the reduced supplies of coils from mills in the near term, stocks at traders are likely to decline till late December, the second source added.