HRC Futures Decline Amid Supply-Demand Imbalance, Eyes on Macro Factors

The most-traded HRC futures contract continued to fluctuate downward today, closing at 3,358 with a decline of 0.98%. Spot-wise, HRC prices dropped by 10-30 yuan/mt during the day.

Supply side, this week's impact from hot-rolled maintenance was 261,800 mt, down 213,400 mt WoW. Next week's impact from hot-rolled maintenance is expected to be 53,900 mt, down 20.79 mt WoW, indicating that supply pressure may remain unresolved.

Demand side, futures showed a weak trend, with downstream end-use demand remaining cautious. Coupled with the approach of year-end, the seasonal weakening of downstream demand appears irreversible.

In summary, the fundamental imbalance in HRC is gradually accumulating. However, YoY data shows a relatively decent performance. Therefore, the downside space for the most-traded HRC futures contract is expected to be limited in the short term. Further attention should be paid to the development of overseas macro bearish factors and domestic winter stockpiling. After bearish sentiment is digested, prices may stabilize.