After just a few days of post-holiday excitement, slow demand has hit market confidence and dragged Chinese hot rolled coil prices below pre-holiday levels, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 3,930-3,950/tonne ($546-549/t), down CNY 50/t week-on-week. On the Shanghai Futures Exchange, meanwhile, the most-traded, January 2023 contract for HRC gained CNY 40/t from Thursday but lost CNY 79/t from pre-holiday levels to CNY 3,762/t.

Over the past week, HRC production kept rising while consumption gained slowly due to sporadic Covid lockdowns and logistics issues. This, in turn, resulted in an increase in overall HRC inventories, impacting post-holiday sentiment.

Unlike the government's focus on real estate and infrastructure, there has recently been a lack of new stimulus measures in the downstream industries for HRC. Despite positive market expectations of a possible stimulus package to be announced after the 20th CPC National Congress, starting from 16 October, current demand has dampened sentiment and prices.

In export markets, big Chinese mills hesitated to lower offers while spot traders began to sell short.

For SS400 HRC, some traders are targeting purchases at $550/t cfr Vietnam, but they have failed to get this level from mills, several Chinese sources confirmed on Friday.

This sparked some discussions among Southeast Asian players who thought the price level realistic. Chinese exporters however considered it as fake news created by potential buyers to push prices lower.

In terms of SAE1006 HRC, material from more Chinese mills was seen in the market, but most offers are at around $580-600/t cfr Vietnam levels. A major steelmaker in northern China offered its SAE1006 HRC at $570/t cfr Vietnam last week, including 30% of 2mm material.

Kallanish assessed 2mm SAE 1006 HRC at $560-570/t fob China on 14 October, down $10/t from 30 September.