Chinese domestic hot rolled coil prices have continued to increase over the past week, with the availability of different brands on the Shanghai spot market having also increased. Export prices are following in line with an uptrend in Southeast Asian prices, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was trading at CNY 3,920-3,940/tonne ($566-569/t), CNY 10/t higher from the previous Friday. On the Shanghai Futures Exchange, the May 2020 HRC contract closed CNY 15/t higher than Thursday and CNY 40/t higher over the week at CNY 3,600/t.

The futures prices had slumped on Thursday but then rebounded on Friday. Inventories have continued to increase steadily even though delivery of goods to the market has been slower than traders expected. Meanwhile some mills have been limiting output as production costs have increased. There is so far little sign of spot prices falling, but traders are still holding out for lower prices before actively restocking. This has created some uncertainty over the market after the Chinese New Year holiday. Traders will have to purchase material for distribution in the spring, but there is also material at ports that is expected to boost inventories at some point in the coming weeks.

In export markets, some northern Chinese mills have raised offers for base SAE 1006 to $515/t fob China. However, the actual deals from one eastern mill to Vietnam were concluded at $515-520 cfr before the mill sold out. The Vietnamese market has been supported by infrastructure construction plans, but some traders note that projects have been delayed by a lack of financing. Kallanish assessed 2mm SAE1006 HRC at $505-510/t fob, $7.5/t higher week-on-week.