SMM Daily Comment On Domestic HRC Market (Sep 8)

SHANGHAI, Sep 8(SMM) – HRC futures prices extended last night session’s loss today, and closed down 1.91% at 3,809 yuan/mt. In the spot market, mainstream offers for HRC declined by 40-90 yuan/mt today. This week HRC output continued to increase, while terminal demand sluggishness was felt from price slips and impact of the typhoon weather in the south China. A build-up of inventory was reported in Northeast, North, East and Central China, except for a slight reduction in inventory in South China. Looking forward, strong supply-demand fundamentals of iron ore will leave limited room for iron ore prices to drop. Coke market will also appear bullish. On the demand side, there will be no significant change in downstream order volume in a short run, and terminal demand is unlikely to improve. Furthermore, it will take time for early positive policies related to real estate and manufacturing to exert impact on HRC market. According to the latest SMM survey, steel mills’ great incentive to produce HRC will keep supply pressure high. Therefore, with ample supply and muted demand, HRC 2401 contracts may fluctuate in the range of 3,750-4,000 yuan/mt next week, and HRC prices may swing in a range of minus 100 yuan/mt to plus 100 yuan/mt.