China HRC prices to surge $35 a tonne

Hot-rolled coil (HRC) prices are set to go up $25-$35 a tonne in China to around $480 a tonne. Industry sources said that although construction activity in the country has slowed down, demand for steel has remained firm, leading to a revival in prices.

Analysts tracking the global steel market said: "The Chinese government may have slowed down spending on infrastructure, but the demand for steel in the country has not fallen. The HR prices will rise in the next few days."

The Chinese government has been curtailing investments into infrastructure projects to cool down the economy, leading to a dip in metal prices in the country. Neighbouring countries in south east Asia also witnessed a decline in steel prices.

However, HR coil prices in the US, European and Middle East regions have been buoyant and are expected to remain firm in the next few weeks.

Chinese HR coil prices had come down to $450-$460 in the last few weeks, while in the US and European markets, HR coil prices were being quoted at $500.

Analysts said, "Prices in China are looking to improve by around $35 in the next few days and are looking at matching US and European HRC prices." They further added that the slowdown in China was actually a correction of an unrealistic bubble, which was good for the industry.

Meanwhile, scrap prices in China, were ruling at around $270, which was higher than prevailing prices in other markets.

However, iron ore prices have come down by around $15-$20 a tonne to $65-$70 a tonne. Metallugical coke prices have also slipped to around $400 levels from $440-$450.

"While prices of raw materials have been declining globally, there is still a significant shortage in coke. Therefore prices may swing back upwards after this correction," an industry source said.