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China HRC output to continue to fall in March, improving fundamentals to support spot prices
Mar 16, 2021 14:14CST
Source:SMM
China’s output of hot-rolled coils and plates is likely to extend declines in March, as many steel makers will conduct routine maintenance. In addition, they have to restrict production as local governments have issued stricter environmental protection measures to respond to the policy of carbon neutrality.

SHANGHAI, Mar 16 (SMM)—China’s output of hot-rolled coils and plates is likely to extend declines in March, as many steel makers will conduct routine maintenance. In addition, they have to restrict production as local governments have issued stricter environmental protection measures to respond to the policy of carbon neutrality.

An SMM survey showed that 35 steel makers in China plan to produce a total of 10.02 million mt of hot-rolled coils and plates March, down 1.6% from the realised output in February.

Lower output prompts Chinese HRC makers to put less cargoes into the domestic and overseas market. The output for export sees larger decline. The global COVID-19 pandemic has been curbed as the vaccine rollout progresses well, and the global economy has recovered rapidly. As many manufacturers have been returning to normal production, demand-supply structure of steel products overseas has gradually improved, which has lowered their demand for Chinese steel products.   

The output of hot-rolled coils and plates for domestic sales will drop 1.5%, or 146,000 mt, from the month before to 9.39 million in March, while that for export will shrink 3.4%, or 22,000 mt, to 623,000 mt. 

Output in the north and east to fall sharply in March, while gains in south central and west China to rise slightly    

North China: Planned output of hot-rolled coils and plates=5.15 million mt, -118,000 mt/2.24%; exports=423,000 mt, -22,000 mt/4.94%

East China: Planned output of hot-rolled coils and plates=2.65 million mt, -232,000 mt/8.05%; exports=200,000 mt, barely changed

South Central China: Planned output of hot-rolled coils and plates=1.91 million mt, +160,000 mt/9.14%; no exports

West China: Planned output of hot-rolled coils and plates=305,000 mt, +22,000 mt/7.77%; no exports

Planned HRC output will continue to fall in March, easing some supply pressure. Demand, meanwhile, improves less than expected as high prices deterred downstream users from purchasing. But actual end user demand has not decreased, the SMM survey showed. Therefore, the HRC fundamentals are still improving, which are supportive to spot prices.

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