China's HRC prices seen staying afloat in Apr'26

• Rising production and demand create market equilibrium
  
  
• Trade frictions and high stocks limit price growth
  
  

Mysteel: Buoyed by a gradual pick up in downstream demand and firm support from raw material prices, China's hot-rolled coil (HRC) prices experienced a certain rally in March. Entering April, steady production and continuous consumption recovery will gradually form a weak equilibrium in HRC supply-demand fundamentals, keeping the flat steel prices at elevated levels, according to Mysteel's latest monthly report on the commodity.

By April 10, Mysteel assessed China's national price of Q235 4.75mm HRC at Yuan 3,312/t ($485/t), up by Yuan 29/t or 0.88% from the same day of March.

On the supply side, HRC output is expected to continue climbing this month, in line with rising hot metal output nationwide, given the fact that steelmakers can still enjoy some profits on finished steel sales, the report points out.

The daily hot metal output among the 247 blast furnace mills Mysteel regularly monitors averaged 2.39 million tonnes during April 2-8, higher by a large 181,800 tonnes or 8.2% on month. During the same survey week, the combined HRC output among the 37 mills Mysteel regularly monitors stood at 3.02 million tonnes, up 63,500 tonnes or 2.2% from a month ago.

As for hot coil demand, sales and output in downstream manufacturing sectors had staged a mild recovery last month, mainly underpinned by resilient automobile exports and a gradual pickup in domestic demand after the Chinese New Year break. This trend is likely to sustain in April as the trade-in policies for consumer goods continue to gain traction and export orders for the manufactured goods are relatively full.

However, China's HRC exports are likely to contract further in April amid rising trading frictions. On April 2, Vietnam announced a 27.83% provisional anti-circumvention duty on Chinese hot coils in widths from 1,880 mm to 2,300 mm and from 1.2 mm to 25.4 mm thick, effective on April 17, as reported. Faced with higher tariff pressure and squeezed export profits, some steel mills have reduced their planned production for exports, Mysteel has learned.

The slightly balanced fundamentals have led to a steady destocking in the domestic HRC market. By April 9, HRC inventories at the 37 steel mills and 194 traders' warehouses Mysteel tracks nationwide had declined for more than one month to sit at 794,300 tonnes and 4.92 million tonnes, respectively, lower by 11% and 5.1% on month. Compared to the year-ago level, HRC stocks held by traders remained 16.7% higher though, mirroring a slow pace of demand recovery and an overall cautious trading sentiment.

On the cost front, the expected materialization of the second bout of coke price hikes and firm iron ore prices will likely underpin hot coil prices this month, while high-level inventories, rising HRC supply and uneven demand recovery may limit the upward strength of the flat steel market.

Note: This article has been written in accordance with a content exchange agreement between Mysteel and BigMint.