In early April, the China Iron and Steel Association released preliminary data on crude steel production, revealing that output in the first half of the month reached a record high of 2,213,900 tons. This surge was accompanied by an increase in the proportion of hot-rolled coils (HRC) being produced, with March seeing a record output of 14.978 million tons. Despite this, demand from downstream industries remains sluggish, creating significant pressure on the HRC market.
As May approaches, the expected destocking process for hot-rolled coils has not yet started, which is raising concerns among industry players. The capital market also experienced a downturn in April, leading to sharper declines in the sensitive coil market. In major cities, hot-roll prices have hit new annual lows. Analysts had previously predicted that spot prices for HRC might fall back in March and April, and these predictions have largely aligned with actual market movements.
According to recent analysis, the trend for this month may see a slight increase in HRC prices, but the room for growth is limited. Industry experts have observed a negative correlation between the order rate of steel mills and steel price fluctuations. For instance, in the first quarter of last year, as steel prices rose, the order rates of steel mills declined. Conversely, when prices fell after the peak in April and August, the order rates continued to drop. However, during the September to December period, prices surged again due to positive market stimuli, while order rates gradually declined.
This month, both Tanggang and Shougang saw a decline in their hot-rolled coil order ratios in Tianjin’s steel market. Shougang's dropped by 30 percentage points, while Tangshan Steel’s decreased by 10. Based on the inverse relationship between order rates and steel prices, it is expected that HRC prices will rise slightly compared to April. However, compared to March levels—where Shougang had a 55% order rate and Tangshan Steel reached 80%—the pressure on resource circulation this month is similar to that seen in March. As a result, it's unlikely that steel prices this month will surpass those of March.
Last year, the flow ratio between HRC resource regions decreased, and regional price shifts, especially in Tianjin and Chongqing, often influenced national HRC price trends. Therefore, using the Tianjin steel market as a case study provides a meaningful insight into broader market dynamics.
The average order rate for hot-rolled coils across five northern steel mills—Shougang, Tangshan Iron and Steel, Handan Iron and Steel, Anshan Iron and Steel, and Benxi Iron and Steel—was 71% this month, down 9 percentage points from April. This suggests that supply pressures in the circulation market are lower than in April. However, it still represents a 10% increase from March. Thus, the volume of HRC sold this month is expected to be lower than in April but higher than in March.Pattern Rubber Roller,7"Rubber Roller,10"Rubber Roller,4"Texture Roller
Jiangmen Nichiyo Decorative Material Co.,Ltd. , https://www.nichiyopt.com