Chinese domestic hot rolled coil futures and spot prices were boosted by production cuts in Tangshan and expectations of macroeconomic stimulus policies, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 3,880-3,900/tonne ($544-547/t), up CNY 100/t from a week earlier. On the Shanghai Futures Exchange, the most-traded October 2023 contract for HRC gained CNY 73/t from Thursday and CNY 101/t on-week to CNY 3,823/t.

Domestic HRC consumption did not improve immediately when prices started to rise last week, but then climbed higher as some end users became afraid price hikes could continue.

Expectations of stimulus also fuelled futures increases last week, although demand showed limited improvement and most expectations were speculative. Kallanish understands that stimulus measures are unlikely to be announced in June because it is better for the government to launch stimulus to boost economy from the beginning of a new quarter.

“I heard some friends in banks say that the government is investigating the situation now, and may remove thresholds and restrictions on home purchases in tier-1 cities,” a source said on Friday.

Domestic gains also drove up export offers, but overseas buyers did not follow up as demand remained lacklustre. Because of the huge range between offers, the market is still seeing some low-priced offers.

Most SAE 1006 HRC offers were at $570-590/t fob China, with the most competitive one given by a mill in eastern China at $565/t fob China on Friday. But these were still higher than the target price of buyers. The local price in Vietnam touched $560/t on Friday.

A cargo of Chinese SAE 1006 HRC was heard sold at $553/t fob China to Turkey in the week of 2 June, with an estimated freight of $30/t. However, this was not repeatable for Chinese steel mills, especially those with good reputations.

As for SS400 HRC, mills in Tangshan offered $535/t fob nearby ports on Friday, despite buyers holding to lower bids and showing limited interest.

Kallanish assessed 2mm SAE 1006 HRC at $565-575/t fob China on Friday, down $5/t from the prior week. The fall in assessment against the overall increase last week was due to some Chinese sellers having the willingness to accept lower deal prices.

“No exporter can currently export [normal] HRC in a way that does not circumvent VAT. It's just a tacit understanding,” an exporter said during the Asia Steel Forum held by Kallanish in Shanghai on Wednesday.