Will HRC Price Receive Support From Rising Raw Material Cost?

SHANGHAI, Oct 18(SMM) – Yesterday, HRC futures continued their gains in the night session and closed at 3,766 yuan/mt, up 0.67%. In terms of spot prices, HRC quotations in mainstream areas of China increased by 10-20 yuan/mt this week. According to SMM statistics, the production loss caused by HRC maintenance this week is estimated to be 174,500 mt, up 58,600 mt WoW. The production loss next week is expected to be 188,800 mt, up 14,300 mt WoW, easing the supply pressure. Futures prices rose recently, stimulating terminal and speculative customers to purchase, and the overall transaction situation was acceptable. In terms of costs, steel mills were in a state of loss, and blast furnace maintenance plans were on the agenda. However, the tight balance of coke supply remained unchanged, coke and steel companies were still in a price battle and there was no risk of collapse of short-term cost support. Taken together, coke and iron ore will run stably to strong in the short term. Structural support still existed, but costs reached a certain level, causing the upward drive to be slightly insufficient. Demand picked up slightly, but it is difficult to see a large improvement. The subsequent factor that drives HRC prices upward may be supply reduction. It is expected that HRC prices will fluctuate in the short term, and market participants need to pay attention to the extent of independent production cuts caused by steel mills’ losses and the effect of overseas black swan events.