SHANGHAI, Jan 28 (SMM) - During the Chinese New Year (CNY) holiday, the spot prices of hot rolled coil (HRC) in various regions of the country were basically stable compared with before the holiday. Both traders and terminal players were on holiday, and the market stagnated.
On the first working day after the holiday, HRC prices rose across the board with an increase of 10-50 yuan/mt, especially north China.
Looking at the follow-up period, due to the improvement of profits and sales situation in China and abroad, coupled with the market's expectation of demand recovery by the middle of 2023 fuelled by investment in infrastructure and manufacturing, steel mills are still enthusiastic about producing HRC. It is expected that there is still room for mounting supply in January-February. After the festival, demand will also recover slowly. Considering the positive macro stimulus, the slowdown of interest rate hikes in major overseas economies, the bullish outlook and high costs, short-term HRC prices will be resilient, especially in the first trading week post CNY holiday.
It is worth noting that due to the stable production of steel mills during holiday, the domestic HRC inventory has been accumulating rapidly, while it will take time for demand to fully recover. The inventory pressure in the spot markets in south China and east China may cap the spot prices. Therefore, there is possibility that HRC prices may fall after rising post the CNY holiday.