Alongside China’s overall raw materials and steel price hikes, hot rolled coil prices also kept rising amid a positive macro mood last week. Higher prices met resistance on Friday however, due to fear that a peak had been reached and mediocre demand, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 HRC was traded at around CNY 3,980-4,000/tonne ($549-552/t), up CNY 10/t from the prior Friday. On the Shanghai Futures Exchange, the January 2024 contract for HRC lost CNY 36/t from Thursday but gained CNY 27/t on-week to CNY 4,012/t.

For plates, both supply and demand were weak, so prices just followed the trend of flats. In Wuxi on Friday afternoon, 20x2,000mm Q235B plate was traded at around CNY 4,040-4,060/t, up CNY 40/t on-week.

Raw materials prices rallied last week and national steel production remained at low levels for this year, supporting steel futures. For mainstream products such as Q235 HRC, traders have less inventory pressure, so discounts are smaller when selling.

But unlike rebar, national HRC apparent consumption slipped slowly. Such high prices in winter also spurred some concerns and this dragged on prices on Friday. Some merchants in the market believed that HRC futures must fall back below CNY 4,000/t.

Exporters' views on the future also tend to be polarized. About ten days ago, some Chinese SAE 1006 HRC was heard booked at $570-575/t cfr Vietnam. Although most exporters agree with this price, there are still traders who think this price is too low after the price rose sharply.

Because traders took the lead the previous week, their quotations did not increase much in the past week. The most competitive quotes for SAE 1006 HRC were at $575-580/t cfr Vietnam. Mills however, hesitated in the week before last, so most of them raised base prices for HRC by $20/t at most last week.

Despite the fierce offer increase, the recovery in transaction prices is limited as buyers showed resistance. Demand is expected to keep constraining any rapid increases in export prices.

Kallanish assessed 2mm SAE 1006 HRC at $555-560/t fob China on 17 November, up $5/t for the second week in a row. 

Freight has seen some gains recently. The cost from China to Vietnam now stands at $11-13/t.