The decline in stocks of hot-rolled coil (HRC) among Chinese traders, ongoing since October, extended further into November, according to Mysteel’s latest stock survey. As of December 12, the stocks at traders in 33 cities nationwide checked by Mysteel touched a historical low since January 2013 at 1.6 million tonnes, mainly because actual demand stayed comparatively stable while supplies of coil in the market remained tight, market insiders said.
The stocks at traders as of last Thursday had declined for a tenth successive week, falling by another 6.8% on week, the survey results showed. Meanwhile, hot coil inventories at Mysteel’s 37 sampled flat steel producers also declined 1.7% on week to 788,000 tonnes as of December 11, the latest stock survey showed.
“The availability of HRC in the market was limited as the majority of coils booked for December delivery had not arrived yet, and actual demand did not see any obvious signs of weakness,” a Shanghai-based steel analyst said, adding that traders are holding onto offer prices currently, given the low levels of stocks at hand.
Thus, domestic HRC prices continued to trend upward for a seventh week over December 9-13, with China’s national average price for Q235 3mm HRC increasing further by Yuan 60/tonne ($8.6/t) on week to reach Yuan 3,940/t including the 13% VAT as of December 13, according to Mysteel’s database.
However, expectations for prices for the short-term future remain negative, another Shanghai-based steel trader told Mysteel, pointing out that the more that prices rise, so too do the risks. In fact, the high prices currently increased the likelihood of a price collapse when rises in supply see more coils hitting the market.
Over December 5-11, HRC production among the 37 surveyed steelmakers reached a high of 3.36 million tonnes, up by 6,000 tonnes on week. In parallel, over the same period the rolling capacity utilization rate among those mills also inched up by 0.15 percentage point on week to 85.8% on average.
The analyst shared the dealer’s concern, stating that for the moment, traders wouldn’t stock up too much at such high prices, and that mills have concluded fewer orders for January delivery compared with this time last year.
This article has been published under article exchange agreement between Mysteel Global and SteelMint.
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