As the government said it would start to promote economic recovery from the private sector last week, the market mood has been boosted to a certain extent. This has pushed up Chinese hot rolled coil prices, Kallanish notes.

In Shanghai on Friday afternoon, 5.5x1,500mm Q235 hot rolled coil was traded at around CNY 3,930-3,950/tonne ($547-550/t), up CNY 60/t from a week earlier and touching the highest level since late April. On the Shanghai Futures Exchange, the most-traded October 2023 contract for HRC gained CNY 46/t from Thursday and CNY 59/t from a week ago to CNY 3,933/t.

On Wednesday the State Council emphasised the importance of the private sector to the economic recovery. This enhanced market confidence. The Chinese government has now announced support measures for car consumption and the renovation of old houses in the top 19 major cities.

Meanwhile, HRC stocks declined in the past week despite rising production. Coke is also facing production cuts. These factors boosted both HRC futures and spot prices.

Export prices however, were lingering early last week as domestic fluctuations did not unveil a clear direction. Some offers for September cargoes began to hike on Thursday, but more exporters focused on concluding deals rather than insisting on such a small hike.

A Vietnamese source heard offers of $575/tonne cfr Vietnam for Chinese SAE 1006 HRC on Friday, which fell in the offer range of $570-580/t in the previous week. This was believed to be a reasonable offer after recent gains, but there were still several exporters that said that these offers were too high.

This highlights the inconsistency between exporters' current attitude towards the short-term price recovery. Even after the government issued some stimulus measures, it is not surprising to hear completely opposite opinions over China’s economic recovery in the market.

Kallanish assessed 2mm SAE 1006 HRC at $555-565/t fob China on Friday, up just $5/t from a week earlier.