Steel markets remain weak after recent global financial market turmoil, and confidence has collapsed in China due to low demand and a slow recovery last week. As a result, the price of Chinese hot rolled coil fluctuated at levels much lower than the prior week, Kallanish observes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 4,850-4,880/tonne ($714-719/t), down CNY 150/t week-on-week. On the Shanghai Futures Exchange, meanwhile, the most-traded, October 2022 contract for HRC gained CNY 37/t from Thursday but lost CNY 63/t on-week to CNY 4,767/t.

Despite the poor overall sales, some traders bought more in the eastern China market, in preparation for the possible end of the lockdown in Shanghai, the centre of a major Chinese HRC consuming region. The Shanghai government said limited normal activities would be allowed after mid-May. Most sources surveyed however think this will be possible only in June.

The resumption of output at carmakers in Shanghai has indeed started to improve sentiment since Friday, as this should support HRC demand before the whole city opens up. SAIC Motor and Tesla are producing 2,000 cars per day, according to Wu Qing, Vice Mayor of Shanghai.

The Chinese yuan, meanwhile, continued to depreciate, exacerbating the decline in Chinese HRC prices in export markets. The lower USD value of Chinese steel and India's expected new lower HRC quotations have also put pressure on prices (see Kallanish passim).

A large number of SAE1006 HRC offers moved to around $800/t cfr Vietnam, mostly for maximum 30% 2mm products. Several offers given directly by big steelmakers still hovered high above the market at $820-830/t cfr Vietnam.

“I heard one mill is offering at $780/t cfr Vietnam for SAE1006 HRC,” one source said on Friday. But Kallanish learns this product is always of lower quality than other major mills.

Kallanish assessed 2mm SAE 1006 HRC at $785-795/t fob China on 13 May, down $25/t from a week earlier.