[SMM HRC Daily Review] Rumors of "small essays" on production restrictions resurface, with HRC futures and spot prices initially weakening before strengthening during the day

Published: Aug 4, 2025 17:11

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Today, HRC prices initially weakened before strengthening, with the most-traded contract closing at 3417, up 0.26%. In the spot market, spot market prices were stable or rose slightly compared to last Friday, with market transaction performance being moderate. Today, there were renewed rumors of "small essays" on production restrictions: it was rumored that strict production restrictions would be implemented from August 15th to the end of August, with a 30% reduction in blast furnace and sintering operations, and a complete 4-day shutdown of blast furnaces from September 1st; additionally, steel mills in some regions may face production restrictions ranging from 15% to 20%. Driven by these rumors, HRC futures strengthened slightly.

In the short term, according to SMM maintenance data, the announced impact of hot-rolled maintenance in August is approximately 694,600 mt, an increase of 423,800 mt MoM. Maintenance is concentrated in the north-east China, North China, and South China regions. Considering the moderate profit margins of steel mills currently, production may fluctuate at a high level in the first half of the month, while in the second half, attention should be paid to the substantive impact of "parade" production restrictions. It is not ruled out that production restrictions in Hebei may lead to expectations of a reduction in HRC supply. On the demand side, August marks the end of the off-season, with the downstream demand for sheets & plates weakening further, but

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