SMM daily comment on HRC market (Aug 8)

SHANGHAI, Aug 9 (SMM) –

HRC futures softened yesterday, closing down 0.7% at 3,948 yuan/mt. In the spot market, mainstream offers for HRC declined by 10-30 yuan/mt yesterday. According to SMM statistics, triggered by maintenance of BFs, pig iron production reduction was 1.0685 million mt this week, down 129,200 mt WoW. In terms of HRC, the maintenance-induced HRC production reduction was 80,500 mt this week, down 88,900 mt WoW, and will be 42,000 mt next week, down 38,500 mt WoW. At present, rigid terminal demand lingered. The rain in the north and the high temperature in the south will make for overall demand sluggishness in a short term. Unbalanced supply-demand fundamentals occurred. Looking at the follow-up, if CPI and PPI to be issued tomorrow are lower than expected, HRC market may fall into a recession, but will still receive cost support from coke prices in a short run. At present, the market had certain expectations on the implementation of production restrictions on August 15, and it will boost market sentiment by then. There will be still room for profits of forward-month contract to widen. HRC market will still swing in a wide range on the near-term horizon.