SMM daily comment on domestic HRC market (Aug 31)

SHANGHAI, Aug 31 (SMM) – HRC futures fluctuated upward and closed at 3,931 yuan/mt today, an increase of 1.89%. In the spot market, HRC quotations in mainstream cities rose by 10-50 yuan/mt. According to SMM statistics, the steel mill production reduction caused by the overhaul was further reduced this week, and since HRC profit was better than rebar, HRC production increased slightly. Considering the high enthusiasm of steel mills, production is expected to increase next week. On the demand side, terminal markets maintained low inventory, causing stockpiles of steel mills in East, North, and Northeast China. HRC fundamentals remained weak. On the cost side, the fundamentals for iron ore remain healthy in the short term, supporting HRC prices. Recently, the policy of “Issue loans based on housing ownership” was announced in many regions, and China’s manufacturing PMI increased MoM in August, which improved market sentiment. Besides, anticipation for peak season has triggered speculative activities. Hence, market players should keep a close eye on when the crude steel production cap will be implemented and if demand will be strong in the peak season (September). Short-term HRC prices may still fluctuate in a wide range.