[SMM Sheets & Plates Daily Review] Cost Support and Weak Demand, Hot Rolled Coil to Move Sideways Next Week

This week, cold-rolled and hot-rolled prices weakened, with overall transactions turning weaker WoW. Supply side, rolling line maintenance decreased WoW this week, reducing the impact on output, and HRC production showed an increase overall. Demand side, apparent demand edged up slightly WoW this week. Inventory side, this week, SMM’s tally of HRC social inventory across 86 warehouses nationwide stood at 4.3519 million mt, down 114,500 mt WoW, or a decline of 2.56%. By region, inventory in South China and Northeast China saw slight accumulation, while North China, East China, and Central and West China continued destocking. Cost side, coking coal and coke futures trended strongly this week. The fifth round of coke price increases was implemented, and hot metal output rebounded, supporting iron ore prices. HRC cost support was strong. Looking ahead, expectations for a sixth round of coke price increases remain, and according to SMM, hot metal output is still expected to rise further, providing demand support for iron ore. Overall, the cost side still offers support. From the perspective of HRC fundamentals, the current supply-demand imbalance has not yet accumulated to drag on prices. However, considering that downstream buyers mainly purchase as needed during the off-season, demand is unlikely to see a significant surge, capping price increases. Next week, HRC prices are expected to remain range-bound, with the most-traded HRC contract trading in the 3,340-3,420 range.