Spot prices for hot-rolled coil in China fell on Tuesday October 26 amid weakening demand and a weakening of the futures market on Monday night.
Domestic
Eastern China (Shanghai): ۵,۵۰۰-۵,۵۵۰ yuan ($862-870) per tonne, down by 50 yuan per tonne
The most-traded HRC contract on the Shanghai Futures Exchange fell sharply on Monday night, plunging to a four-month trough of 5,135 yuan per tonne during the session.
This led to spot prices falling on Tuesday, with weaker-than-expected demand during what is typically a peak season overshadowing supply reductions, a Shanghai-based industry analyst said.
A rebound in the futures market on Tuesday failed to push spot HRC prices back upward.
Cost support, coupled with ongoing output cuts, lent some support to steel futures. Steelmaking costs remain high due to elevated spot prices for coke and coking coal, a second Shanghai-based industry analyst said.
The China Iron & Steel Association (Cisa) reported on Monday afternoon that its member mills’ daily crude steel output had averaged 1.88 million tonnes per day in the first 20 days of October, down by 2.75% from September’s daily average and 13.45% lower than that in October last year.
Traders said that spot trading activity for HRC in Shanghai remained weak on Tuesday despite recent price decreases, which they said pointed to weak demand.
Export
Fastmarkets’ steel hot-rolled coil index export, fob main port China: $۸۹۰ per tonne, down by $6.64 per tonne
Mainstream offers for SS400 HRC from trading companies and small mills in China fell to $890-900 per tonne fob China on Tuesday. These compare with offers of above $900 per tonne fob from trading houses a day earlier.
But trading remained muted because the gap between these and bids was still wide.
South Korean buyers were likely to bid at $860-865 per tonne fob China because they were able to buy at similar equivalents from their local market, a Tianjin-based trader said.
Chinese prices remain uncompetitive in the export market compared with those for cargoes originating in Russia, India and other regions.
This, coupled with lingering concerns over a possible introduction of export duties at the start of next year, kept Chinese HRC unappealing to foreign buyers, the trader said.
Market chatter
“With the property sector saddled with a cash crisis, infrastructure struggling to achieve significant improvement, and manufacturing investment subdued by worsening downstream profits and a lack of a strong recovery in overseas markets, weakening demand for steel looks set to limit the upside potential in prices that are driven by supply reductions,” a Tianjin-based industry analyst said.
Shanghai Futures Exchange
The most-traded January HRC contract ended at 5,236 yuan per tonne on Tuesday, up by 56 yuan per tonne from Monday’s close.
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