SMM daily comment on domestic HRC market (Aug 25)

SHANGHAI, Aug 28 (SMM) –

Last Friday, the HRC futures contract fluctuated and closed at 3,917 yuan/mt, a decrease of 0.43%. In the spot market, the HRC prices in major cities across the country remained stable. This week, After a brief drop, HRC social stocks rose again as end demand failed to sustain. End users made purchases only after prices stabilized at a high level. Looking ahead, the implementation of the crude steel production cap policy has not started yet. It is expected that HRC production will increase slightly next week.

In terms of demand, overall end-user demand remains weak, even as the peak season is nearing. The supply-demand imbalance of HRC is obvious. In terms of costs, short-term iron ore prices are supported by high pig iron production. The strength in raw materials is also an important driving force for the recent rise in finished steel prices.

There are no new meetings or data releases scheduled for next week. The biggest uncertainty lies in the crude steel production cap policy. As the weekend approaches, news of production restrictions in Shandong, Shanxi, and other regions will spread more widely next week. If confirmed, it will boost market sentiment and be an important turning point for HRC prices. With strong cost support, the short-term HRC price is expected to see minor drop. HRC price may swing between –minus 100 yuan/mt and plus 100 yuan/mt, with the HRC2310 contract expected to trade in the range of 3,850-4,100 yuan/mt. The focus will be on the implementation time and specific measures of the crude steel production cap policy, as well as the sustainability of demand during the seasonal transition.