Prices of carbon-steel hot-rolled coil (HRC) in China will lose some ground in 2023, as the supply from mills will exceed demand from end-users, according to Mysteel’s newly published forecast for the product.
The average price of Q235 4.75mm HRC during 2022 was assessed by Mysteel at Yuan 4,496/tonne ($661.2/t) including the 13% VAT. This year, the average will likely decline, moving in the range of Yuan 3,500-4,500/t including the 13% VAT and following an N-shape or M-shape trajectory, the report said.
During this year, Chinese production of HRC will grow to 269.6 million tonnes, higher by 4.3% on year, as the country’s hot strip mill capacity is expected to grow by 12.5 million tonnes/year. South China will host most of the additional HRC capacity, according to the report.
As for HRC demand, China’s apparent consumption of hot coils is seen increasing to 261.7 million tonnes, edging up by 4.5% on year, as demand HRC for use in infrastructure projects is likely to rise, the report showed.
Mysteel predicts that funding for infrastructure projects this year will grow by around 5% on year, as the central government has stressed that local governments provide funding for infrastructure projects in advance, implement a strategy to expand domestic demand and strengthen the internal driving force for development.
During 2023, production of motor vehicles will edge down 2-3% on year as demand for automobiles was brought forward to the second half of 2022 after the government halved the purchase tax for certain types of vehicles, the report noted.
As for the white goods sector, the demand for electric appliances will remain largely stable this year, as the possible rise in orders from overseas buyers is likely to be offset by waning demand in the domestic market, it said.
The total exports of HRC will slip by 5% on year to 8 million tonnes this year, mainly because the narrowing price spread between domestically produced hot coils and those produced in other countries will cause Chinese HRC to lose competitiveness.
Written by Villanelle Xia, xiayi@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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