Domestic hot-rolled coil prices in China extended their gains on Thursday July 1, with sustained expectations of production curbs in the second half of 2021 sending HRC futures to their highest in two weeks.
Domestic
Eastern China (Shanghai): ۵,۴۶۰-۵,۵۰۰ yuan ($845-851) per tonne, up by 40 yuan per tonne from 5,420-5,460 yuan.
The most-traded HRC contract on the Shanghai Futures Exchange rose to – 5,494 yuan per tonne – its highest since mid-June, on Thursday morning while market participants continued to speculate about nationwide steelmaking cuts in the second half of the year to prevent crude steel output from exceeding that of last year.
The contract went on to end the day unchanged from Wednesday’s close, however.
Beijing’s pledge to have the country’s carbon emissions peak by 2030 and for it to achieve carbon neutrality by 2060 is also making market participants anticipate such production cuts in the second half.
But so far, none of the mill sources that Fastmarkets spoke to have received any official instructions regarding such cuts.
A Hangzhou-based trader said he had a positive outlook for the steel market after July, when demand typically recovers from the low season and tight cash flows, coupled with the possibility of production cuts.
Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۸۴۵٫۹۰ per tonne, up by $4.98 per tonne.
Optimism generated by the strengthening domestic market spilled over to the export market, providing some support to prices even though trading remained thin.
Steel mill sources and traders indicated market prices of around $840-850 per tonne fob for SS400 HRC during the day.
Market participants downplayed the emergence of cheap Russian cargoes in recent days, saying these were due to the country’s plan to impose export duties from August.
Market chatter
“We will not lower our prices to the levels of these Russian cargoes. The impact [from these cheap Russian cargoes] will be limited,” a source at an eastern mill Chinese mill said, referring to cargoes sold by Russia’s Magnitogorsk Iron & Steel Works to Vietnam at $855-860 per tonne cfr. Sources estimate freight rates at under $20 per tonne.
Shanghai Futures Exchange
The most-traded October HRC contract ended at 5,428 yuan per tonne on Thursday, unchanged from the previous day’s close.
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