[Ferro-Alloys.com] Prices of hot-rolled coil (HRC) in China's spot market continued tracking upward for the sixth week over November 23-27, even though prices of rebar prices displayed some signs of weakness amid softening in demand in winter, a comapnyl noted. HRC demand from downstream users has stayed steady whilst the low levels of stocks have ensured prices remain propped up.

China's price of Q235 4.75mm HRC rose further by Yuan 33/tonne ($5/t) on week to Yuan 4,138/t including the 13% VAT as of November 27, or a new high since November 6 2018, data showed.

"The plummet in futures prices in the early part of last week weighed on market sentiment and caused traders' offering prices to decline slightly, but the limited availability of hot coil in the spot market - as well as strong support from raw materials prices - prevented HRC from declining," a Shanghai-based market source said, adding that HRC futures prices rebounded soon and that room for physical prices to rise still exists.

The most traded HRC contract on the Shanghai Futures Exchange for January 2021 closed at Yuan 4,151/t on November 27 when daytime trading session ended, gaining Yuan 75/t from the settlement price on November 20.

Besides, demand for coils has yet to show any signs of weakening. Thus, as of November 26, the stocks held by traders in China's 33 cities checked by Mysteel declined further for the seventh week by another 111,300 tonnes on week to 2.3 million tonnes, according to a survey.

The inventories at 37 sampled mills also decreased by 15,200 tonnes on week to around 1 million tonnes as of November 25, according to the survey.

However, another trader in Shanghai expressed concern about the volume of coils arriving from North China. "As the winter approaches, more shipments from northern areas are expected, which might exert pressure on prices," he stated.

On the other hand, hot coil production among those 37 surveyed mills stayed high at 3.3 million tonnes over November 19-25, despite the on-week decline of 9,800 tonnes. In parallel, the rolling capacity utilization rate among the mills also dipped 0.25 percentage point on week to 84.92% on average over the same period, Mysteel's survey showed.

Source: Financial Tribune