Weekly: Near-term outlook on China’s steel products

• Longs to gain as mills shift focus to semis production
• Supply-demand imbalance to pull down HRC prices

Mysteel: Drawing upon the results of related surveys and communication with Chinese market participants, below is the near-term outlook for five key steel products that Mysteel shares every week.

Product wise outlook:

Rebar & wire rod: Prices of these two long steel products will likely strengthen modestly during the week to June 13. On the supply side, steelmakers generally are inclined to produce more steel semis than long steel items for better returns. Meanwhile, demand from building contractors remains constrained by persistent hot and humid weather conditions. However, the ongoing inventory declines and market expectations for supportive macroeconomic policies may prop up the long steel prices.

Hot-rolled coil: HRC prices are projected to continue the downward trajectory over June 9-13 due to rising output and low demand. Steel mills are speeding up HRC deliveries to the market, while end-users act cautiously towards procurement. This supply-demand mismatch has led to an accumulation of HRC stocks in the market.

As of June 5, HRC inventories at commercial warehouses in 33 Chinese cities under Mysteel’s tracking ended a three-week decline, growing by 2.5% or 65,000 tonnes on week to 2.64 million tonnes.

Cold-rolled coil: CRC prices may slightly fluctuate in the week through June 13, with output staying largely stable from the previous week, while demand may stay feeble.

Mysteel’s projections showed that CRC output among the 29 steelmakers it monitors nationwide will persist around 870,000-880,000 tonnes this week.

Medium plate: This price is anticipated to be narrowly volatile in the week ending June 13. Domestic steel producers have lowered the production of medium plates. Nonetheless, market sentiment remains cautious, and end-users mainly procure this flat steel for immediate needs.

Sections: Steel section prices may soften amid fluctuations this week, with output hovering at a low level as some mills have been reining in production due to squeezed profit margins and in response to slack demand.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.