SMM daily comment on HRC market (Aug 10)

SHANGHAI, Aug 11 (SMM) –

HRC futures moved sideways yesterday, closing down 0.76% at 3,921 yuan/mt. In the spot market, mainstream offers for HRC declined by 30-40 yuan/mt yesterday. According to SMM statistics, with restart of mainstream steel mills in Northeast China from maintenance, and production hikes of some steel mills, HRC production increased this week. Boosted by falling HRC prices improving market sentiment and less impact of typhoon weather, terminal demand picked up, but it may not be sustainable. Under such circumstance, unbalanced supply-demand fundamentals were reported. In the short term, high costs and demand increase will keep HRC prices high. On the policy side, there was a game of long-short power. On the one hand, the governments at all levels loosened control over real estate and introduced various policies to support real estate development. But on the other hand, rumors of breach of contract broke out in a number of real estate companies recently, which showed that the real estate may not be able to improve in the short term, which also hit market confidence to a certain extent. Short-term HRC market may softened on the near-term horizon.