Weekly HRC arrivals at major Chinese markets rose to 183,000 mt

SHANGHAI, Jul 15 (SMM) – Deliveries of hot-rolled coil, steel that is heat processed into metal sheets used for car bodies and household appliances, to China’s major trading markets, continued a moderate ascent this week, which is still unlikely to create strong supply pressure or give a hit to prices as demand remains robust.

Major Chinese steelmakers expect 183,000 mt of their HRC deliveries to arrive at Shanghai, Lecong and Tianjin—three major markets in China—in the week ended July 14, up 32,000 mt, or 21% from the previous week, according to data compiled and calculated by SMM.

Shanghai

Arrivals at east China’s Shanghai are estimated to have risen 12,000 mt, or 22%, from the previous week to 67,000 mt, as wider spreads with northern regions and Shandong prompted mills in those regions to step up shipments to Shanghai.

The increase will help ease supply tightness in Shanghai and nearby regions, but is unlikely to turn the market from the current deficit to balance or a surplus. That, coupled with low stockpiles, will deter traders from lowering their offers and help extend the rally in spot prices in Shanghai.

Lecong

While arrivals at south China’s Lecong are estimated to have exceeded 100,000 mt this week, traders are unlikely to feel strong stockpile pressure given continued robustness in consumption.

Unhealthy price spreads between north and south China subdued deliveries of northern HRC to Lecong in previous months when supply ranged 350,000-400,000 mt per month, while this market could consume about 600,000 mt of HRC a month.

The Lecong HRC market’s reaction to recent gains in arrivals after mills including Guangxi Shenglong Metallurgical and Liuzhou Iron & Steel step up shipments looks set to be underwhelming, and HRC spot prices in Lecong are expected to extend their ascent, in line with gains in rebar.

Tianjin

Arrivals at south China’s Tianjin are estimated to have risen to 14,000 mt this week, due to increases from Baotou Steel and Chengsteel. The arrivals have stayed below 15,000 mt for eight weeks in a row, compared to around 300,000 mt in April.

With healthy demand lowering stockpiles, traders in the Tianjin market are reluctant to reduce their quotes. High prices, on the other hand, keep end-users cautious about procurement and limit further upside in prices from current levels. HRC spot prices in Tianjin are expected to hover at highs in the short term.