SMM daily comment on domestic HRC market (Aug 21)

SHANGHAI, Aug 21 (SMM) –

HRC futures prices closed up 0.79% at 3,879 yuan/mt. In the spot market, the HRC quotations in mainstream cities dropped by 10-40 yuan/mt today. Although some steel mills in the southwest have maintenance plans, supply will remain high fueled by the high production enthusiasm. The weak demand of the terminal market and the cautious mentality of downstream procurement caused the oversupply to continue. On the cost side, considerable profits prompted the production of steel mills and boosted the price of iron ore. However, coke started the first round of price cuts, resulting in weakened cost support, but the short-term effect is small. The 1-year LPR fell by 10 basis points, but since the 5-year LPR remained stable, the change did not stir up big waves in the market. No major macro data will be released at home and abroad this week. It’s expected that 2310 HRC contract may fluctuate strongly at 3,850-4,050 yuan/mt.