Production of hot-rolled coils (HRC) among the 37 Chinese flat steel producers Mysteel regularly monitors decreased further to 3.07 million tonnes over December 19-25, easing by another 55,800 tonnes or 1.78% on week, the results of Mysteel's weekly latest production survey show.
The hot-rolling capacity utilization rate among the 37 mills also fell by another 1.42 percentage points to average 78.47% during the same period, the survey results indicated.
Behind the on-week decline in HRC output was the fact that some steel mills in East China had halted their hot strip mills to conduct maintenance during the survey period, respondents noted.
Although last week's national financial work conference in Beijing, convened by China's Ministry of Finance, had initially lifted steel-market confidence after plans were laid for a more proactive fiscal policy next year, caution continued to dominate the domestic steel market, including the HRC sector. Both remained constrained by weak seasonal demand, respondents observed.
However, some steel traders were reluctant to sell hot coils at low prices – pointing to the relatively low level of HRC inventories – which helped defend overall HRC prices to some extent, they added.
As of December 26, while HRC inventories held by the 37 surveyed mills had nudged up by 0.89% on week to 803,400 tonnes, those held at the commercial warehouses Mysteel monitors in 33 Chinese cities nationwide had slipped by 1.26% on week to 2.27 million tonnes as of the same day.
Meanwhile, domestic HRC prices in both the spot and derivatives markets continued softening last week. By December 27, the price of Q235 4.75mm HRC under Mysteel's assessment had inched down by 0.43% on week to Yuan 3,496/tonne ($478.96/t) including the VAT.
On the Shanghai Futures Exchange, the most-traded HRC futures contract for May delivery had also dipped by 0.29% on week to close last Friday's daytime trading session at Yuan 3,400/t.
Source:Mysteel Global
