- March seen as peak month for factory restarts
- Vietnamese AD to impact China’s export volumes
Mysteel Global: China’s hot-rolled coil (HRC) market is expected to find some balance in March, supported by recovering domestic demand and proactive production cuts, despite headwinds from a worsening trade environment globally caused by rising steel protectionism, Mysteel’s latest monthly report suggests.
In March, China’s spot prices of Q235B 4.75 mm HRCs in Shanghai under Mysteel’s assessment are expected to stay largely flat m-o-m at RMB 3,425/tonne (t) ($473/t), including VAT, on average.
March, traditionally a peak month for factory restarts, is set to see sustained consumption growth. As a result, China’s manufacturing sector has steadily ramped up production since the end of the Chinese New Year holiday in early February this year.
For instance, the scheduled production of China’s three most popular home appliances – air-conditioners, refrigerators and washing machines – is estimated to jump by 39% m-o-m to 40.5 million units this month, according to ChinaIOL.com, a leading domestic information provider serving the home appliance and refrigeration industries.
China’s apparent consumption of hot coils may rise by 9% from February to average 3.25 million tonnes (mnt) per week this month.
On the other hand, the average HRC output among the 37 Chinese flat steel producers Mysteel regularly monitors is predicted to ease by 55,000 t or 1.7% m-o-m to average 3.21 mnt per week in March.
This is because while domestic demand remains robust, overseas demand for China-origin HRC has been dampened by tariff increases.
In late February, Vietnam, China’s largest overseas market for steel, announced preliminary anti-dumping duties (AD) on Chinese HRCs, by as much as 27.83%, which will take effect on 7 March.
This has not only hit domestic market sentiment but will also weaken China’s price advantage for HRCs in the Vietnamese market and cause a sharp drop in its export volumes. Chinese HRC exports to Vietnam are likely to fall below 300,000 t in March, plunging by 65% y-o-y.
It is under such huge export pressure that steel mills are less willing to increase HRC production, and some have taken the initiative to schedule more maintenance stoppages. This will reduce the volume of Chinese HRCs produced for export and should bring some relief to its prices.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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