MYSTEEL: Weak fundamentals to drag on China HRC prices in '24
In 2023, the relatively good on-year profits being earned by China's steel mills – especially during the second half of the year – encouraged them to ramp up their steel production including that of hot coils, Mysteel's report noted.
For example, HRC production among the 37 Chinese flat steel producers Mysteel regularly monitors came in at 3.26 million tonnes over December 18-22, the highest weekly total since mid-June 2022, according to Mysteel's weekly survey.
HRC output will also receive a pickup this year with the planned commissioning of some six new hot strip mills with a combined HRC-making capacity of 20 million tonnes/year, Mysteel's report added.
In contrast to the lively expectations of increased HRC supply in 2024, a significant rise in China's domestic consumption of hot coils is hard to imagine, the report noted, as major consumers of coils including the machinery and white goods manufacturing sectors are both under pressure from the country's struggling property market.
For example, China's total sales of excavators to both domestic and overseas markets dropped by 25.4% on year in 2023 to 195,018 units, with domestic excavator sales plunging by 40.8% on year to 89,980 units specifically, the latest data from the China Construction Machinery Association showed.
The mismatch between HRC supply and demand could see the average price of hot coils in China fall below that of 2023, Mysteel's report concludes, explaining that the price trend might rise first and then fall this year, as the country's steel market may find some support in H1 the first half of the year from government stimulus policies.
Year |
Production |
Inventory |
Exports |
Imports |
Apparent HRC |
2023E |
288.05 |
4.26 |
20.18 |
1.44 |
268.43 |
2024E |
295.91 |
4.89 |
19.5 |
0.99 |
276.74 |
Source: Mysteel
Unit: million tonnes; E: estimated
Written by Carly Chen, chenziyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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