Spot prices for hot-rolled coil in China moved within a tight range on Thursday September 30 on thin trading ahead of a week-long holiday to mark the country’s National Day.
Domestic
Eastern China (Shanghai): ۵,۷۴۰-۵,۷۷۰ yuan ($888-893) per tonne, narrowed by 10 yuan per tonne from 5,730-5,780 yuan per tonne
Northern China (Tangshan): weekly assessment: ۵,۷۲۰-۵,۷۴۰ yuan per tonne, narrowed upward by 50 yuan per tonne
HRC prices in eastern China ended the week 50-60 yuan per tonne higher than last Friday’s 5,680-5,720 yuan per tonne.
The most-traded HRC contract on the Shanghai Futures Exchange edged up during the day. This is the fourth day of increases and a departure from two consecutive weeks of losses previously.
The price increases have come amid lower production due to power shortages across parts of China, as well as due to certain provincial government rushing to meet their targets for reducing energy consumption before the year-end.
The power supply gaps have forced more than 20 provinces to start to implement plans to manage electricity usage more systematically, according to local media. With the power crunch spreading to more regions, more and more energy-intensive enterprises, including steel mills, have been asked to scale back operations, constraining steel output.
The output of major finished steel products in China continued to shrink in the week to September 30. They fell by 575,400 tonnes to 8.60 million tonnes, the lowest since March 2020, according to data from a major local information provider released on Thursday afternoon.
The decline was mostly driven by lower production of long steel; that for flat steel was relatively moderate.
In the same week, the output of HRC, hot-rolled plate and sheet fell by 67,000 tonnes to 3.02 million tonnes, while traders’ and mills’ inventories of these products fell by just 26,100 tonnes to 3.59 million tonnes.
A contraction in China’s factory activity in September is adding to concerns over the country’s economic recovery and demand for steel, however.
The National Bureau of Statistics (NBS) said on Thursday morning that its manufacturing purchasing managers’ index for September stood at 49.6 points, down from August’s 50.1 points. This is the first time since February 2020 that the index has slid into contraction territory of under 50 points.
The sub-indexes for factory output and new orders both indicated contraction, dragged down by “low volumes of business at high energy-consuming industries.”
The two sub-indexes for ferrous metal smelting and rolling processing both stood below 45, suggesting “a sharp decline in both supply and demand.”
Trading was thin in the spot HRC market were quiet on Thursday, the last trading day before the October 1-7 National Day break, traders told Fastmarkets.
Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۹۱۰٫۴۷ per tonne, up by $0.47 per tonne
Most trading houses stopped issuing offers ahead of the week-long holiday. They had indicated that $900-920 per tonne fob China were the best prices they could trade in for SS400 HRC.
This is unchanged from a day earlier. The market remained muted with buyers’ bids being much lower.
A Hong Kong-based trader is offering cargoes at $915 per tonne fob Jingtang, while his Vietnamese customers were bidding at $850 per tonne cfr Ho Chi Minh City.
The freight from the nearby Port of Tianjin to Vietnam is about $40 per tonne, according to an estimate by another trader in Shanghai earlier this week.
A major Indian steel mill was sounding out interest for SS400 HRC among Vietnamese buyers. Market sources said it was willing to sell at $860 per tonne cfr Vietnam.
Spot demand in Vietnam has been limited this week after transactions involving Russian and Kazakhstani HRC were concluded last week.
Market chatter
“China is going away on holiday from tomorrow so buyers are waiting for clearer price signals before they do anything,” a steel mill source in Vietnam told Fastmarkets.
Shanghai Futures Exchange
The most-traded January HRC contract ended at 5,713 yuan per tonne on Thursday, up by 16 yuan from Wednesday’s close.
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