HRC futures settled at 3,291 today, up 0.03% for the day. On the spot side, cold-rolled and hot-rolled coil spot prices held steady today, with overall trading activity generally moderate. The weekly balance sheet for HRC was released today. On the supply side, HRC production rebounded this week. On the demand side, demand declined WoW this week. On the inventory side, both mill inventory and social inventory recorded buildup this week. In terms of social inventory, SMM's statistics covering 86 warehouses nationwide (large sample) show HRC social inventory at 4.4982 million mt, up 54,900 mt WoW, up 1.24% WoW, and up 31.38% YoY on a calendar year basis. By region, markets in east China and north China saw inventory buildup, while south China, central China, and northeast China experienced mild destocking. From the market perspective, traders have gradually started stockpiling ahead of the peak season, but downstream procurement has yet to show clear improvement. At steel mills, shipments have improved recently due to market stockpiling activities, but considering the height of peak-season demand, traders have not engaged in above-expectations stockpiling. In the short term, prices lack a clear directional catalyst. The futures market is betting on September peak season expectations, with upside capped by current weak demand and downside supported by costs and future demand expectations. Prices are likely to move sideways within a narrow range.

SMM Steel, Aug. 18 — According to SMM statistics, the estimated total resource shipments in mainstream markets for this week were 182,800 mt, with the shipment level down 29.80% WoW. By market: Table 1: Arrival Comparison of Mainstream Markets Data Source: SMM Steel Shanghai Market: This week, hot-rolled coil shipments to the Shanghai market declined as expected. Specifically, northern resources increased slightly, while shipments from steel mills in south China returned to normal levels this week after concentrated shipments in the previous period. Looking ahead, northern resources remain cost-effective for procurement and will maintain their current performance, while resources from south China will be relatively stable in the short term; therefore, the arrival level of mainstream resources in Shanghai may fluctuate within a narrow range in the short term. Chart-1: Shanghai Market Arrivals Data Source: SMM Steel Lecong Market: This week, Lecong-bound shipments decreased. Specifically, due to unsuitable prices, no large volume of resources from North China has arrived at ports for now, while DDH may be constrained by tight transport capacity, with arrivals pulling back again; overall, the arrival level remained at a low level. Looking ahead, given the current low base, south China is expected to have some growth potential in the short term. Chart-2: Lecong Market Arrivals Data Source: SMM Steel SMM releases hot-rolled shipment data for mainstream market destinations every Tuesday. To subscribe to or follow additional data, please scan the QR code below.

On August 7, data from the General Administration of Customs showed that China exported 10.211 million mt of steel products in July 2026, down 199,000 mt MoM, or 1.9% MoM; cumulative exports from January to July reached 64.995 million mt, down 4.4% YoY. In July 2026, China imported 445,000 mt of steel products, up 4,000 mt MoM, or 0.8% MoM; cumulative imports from January to July were 3.14 million mt, down 10.1% YoY. Table 1: Steel Imports and Exports Data Summary, January-July Source: SMM • China's steel exports stayed elevated with fluctuations in July According to SMM's July export schedule survey, the planned HRC export volume for the month was 1.059 million mt, slightly higher than actual exports in June. SMM export order data showed that export orders for steel products declined from a high level in May. At that time, port inspections on MD and other activities were relatively strict, which slowed down the pace of some export orders. However, orders at steel mills improved slightly. Coupled with the fact that cargoes delayed due to earlier inspections were gradually shipped out in July, overall steel exports in July still delivered a relatively decent performance. Table 2: China's Total Steel Exports Source: SMM • July steel imports remained low On the import side, steel imports in July were 445,000 mt, up 4,000 mt MoM, or 0.8% MoM; cumulative imports from January to July were 3.14 million mt, down 10.1% YoY. Net exports of steel reached 61.855 million mt. Short-term Steel Export Outlook 1. Global manufacturing slid further MoM; overseas demand remained in off-season mode According to J.P. Morgan's global PMI data, the Global Manufacturing PMI for July 2026 came in at 52.1. Although it remained in expansion territory, the pace of expansion slowed for the third consecutive month. The preemptive steel stockpiling demand earlier triggered by geopolitical disruptions in Middle Eastern shipping has been fully cleared. Combined with persistently weak demand for consumer goods, property, and infrastructure among end-users in Europe and the US, global commodity and physical steel orders collectively fell into contraction territory. Alongside this, ASEAN manufacturing PMI also declined again. China's Manufacturing New Export Orders Index for July was 49.6%, down 0.5 percentage points MoM, slipping back into contraction territory. 2. Overseas steel mills have proactively controlled production; supply contraction lacks sustainability In June 2026, global crude steel production fell 0.3% YoY to 157.9 million mt. In China, as the southern rainy season and high-temperature off-season deepened, downstream steel product construction was significantly hampered. Under heavy pressure from persistently inverted profit margins, steel mills' monthly output edged down 0.8% MoM. Excluding China, production in the rest of the world declined 2.0% MoM, with performance diverging in Asia's core regions. India and Vietnam both saw flat MoM output in June; the former was supported by robust domestic infrastructure resilience, while the latter benefited from earlier concentrated stockpiling and steady operation following new capacity ramp-up. In contrast, Japan and South Korea were dragged by slowing production schedules in downstream automotive and manufacturing sectors, showing a seasonal slight correction. Notably, the Middle East and CIS regions, which had plunged deeply in May, saw marginal recovery. Meanwhile, Europe and the US collectively entered a seasonal weakening trajectory. EU production in June dropped significantly by 5.3% MoM, with Germany tumbling 9.4%; North America declined 5.9% MoM and the US also fell 4.0%. The main reasons for the pullback in Europe and the US were, on one hand, the industry's entry into the routine summer maintenance period, and on the other, the high summer electricity prices and steel scrap prices squeezing electric furnace margins, significantly dampening mills' willingness to operate. The decline in overseas production theoretically offers structural opportunities for China's exports. However, the drops in end markets like Europe and the US were more due to proactive production cuts driven by falling demand. Coupled with India and Vietnam still maintaining high output, China's exports continue to face pressure. Figure 1: Global Crude Steel Production by Region Source: SMM 3. Price advantage continued to narrow; export order-taking pressure persisted As of July 31, 2026, the HRC export offers (FOB) for India, Turkey, and the CIS stood at $515/mt, $575/mt, and $515/mt, respectively, while China's HRC export offer (FOB) was $486/mt. China's HRC offers were -$29/mt, -$89/mt, and -$29/mt lower than those other countries, respectively. China's steel export price advantage further narrowed MoM from June. Overseas markets remained in the off-season, and low-price promotions remained the main channel for those countries to ease domestic pressures. In contrast, domestic sales pressure was not evident, and prices remained relatively firm. The price spread between Chinese and overseas markets continued to narrow, and pressure on export order-taking persisted. Figure 2: HRC Offers in Major Global Markets Source: SMM 4. Export orders rebounded from a bottom in June-July; order-taking improved slightly According to SMM's latest steel mill export order schedule, the planned HRC export volume this month was 1.023 million mt, down 2.8% MoM from the actual level last month. SMM steel export order data showed that although overseas markets remained in the off-season, recent restrictions on resource exports from the Middle East (especially Iran) created a notable supply gap in semi-finished products in overseas markets, particularly in Southeast Asia. This shortfall was quickly filled by Chinese resources. On the other hand, traders took profits from spot-futures price spread operations in late July, offering lower actual prices to facilitate transactions, which led to a bottoming rebound in export order data in July. In reality, overseas demand had not yet emerged from the off-season, and a steady recovery in export order-taking still faces pressure. Figure 3: SMM Steel Export Order Volume Source: SMM 5. Anti-dumping cases related to steel increased in July In July, the number of new anti-dumping cases related to steel initiated against China increased, covering products such as steel pipes, coated steel, sections, coiled rebar, wire rod, and hot-rolled coils. Details of specific cases and affected volumes are shown in the table below: Table 3: New Anti-Dumping Cases in July Source: SMM Taking all factors into account, lower actual transaction prices stimulated some volume growth, with semi-finished products accounting for a larger share. Given that July export numbers have already been significantly elevated, SMM expects that total steel exports in August will not sustain a strong unilateral upward trend. Instead, they will move sideways in a high range, while semi-finished product exports will remain relatively high. Figure 4: Steel Exports and Forecast, 2024-2026 Source: SMM Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute decision-making advice. Note: This article is an original work of this official account. For requests related to reprinting, whitelisting, cooperation, etc., please contact us. Without permission, no part may be reproduced, modified, used, sold, transferred, displayed, translated, compiled, disseminated, or otherwise disclosed to any third party, nor may any third party be authorized to use it. Otherwise, once discovered, SMM will pursue legal action for infringement, including but not limited to holding the infringing party liable for breach of contract, restitution of unjust enrichment, and compensation for direct and indirect economic losses. 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SMM Steel, August 4 – According to SMM statistics, estimated total shipments of mainstream market resources this week were 181,300 mt, down 25.05% WoW from the previous week's shipment level. By market: Table 1: Mainstream Market Arrivals Comparison Source: SMM Steel Shanghai market: Shipments of hot-rolled coils in the Shanghai market edged down WoW this week. Specifically, north China resources continued to maintain high shipment levels; shipments from steel mills in south China decreased slightly WoW. Looking ahead, the price difference between north and south China remains high, making north China resources still cost-effective, while south China shipments may see some increase later. In the short term, mainstream arrivals in Shanghai will stay high. Chart-1: Shanghai Market Arrivals Source: SMM Steel Lecong market: Shipments to Lecong were nearly halved this week. Specifically, north China resources continued to see few arrivals at the port, and two major mainstream resources decreased significantly, with DDH adjusting its shipment preference. Looking ahead, mainstream resources have recently approached the bottom, and with the start of a new month, shipments may increase later. In the short term, arrivals in south China are likely to bottom out. Chart-2: Lecong Market Arrivals Source: SMM Steel SMM publishes hot-rolled shipment data for mainstream markets every Tuesday. For subscriptions or more data, please scan the QR code below.

European hot-rolled coil supply is set to tighten as revised EU import quotas and CBAM-related costs reduce the availability of imported material, while improving mill order books encourage domestic producers to restart idled capacity, ArcelorMittal said in its second-quarter 2026 results.

Historical cold-rolled and hot-rolled profitability data shows cold-rolled spot profit exceeded that of integrated hot-rolled coil in most cycles. However, from end-2025 to H1 2026, profit hubs for both shifted lower in tandem, their curves converged persistently, and cold-rolled's traditional processing premium over hot-rolled contracted markedly. At present, spot profits for both hover near break-even within a narrow range, and sector profitability has notably declined. On one side, raw material costs have been resilient, underpinning finished steel price floors; on the other, end-use demand has weakened continuously since the start of this year. Cold-rolled prices have struggled to hold, while steel mills have taken better hot-rolled coil orders than cold-rolled this year, with firm hot-rolled prices squeezing cold-rolled processing margins and narrowing the profit gap further. Looking to H2 2026, cold-rolled and hot-rolled profits are expected to consolidate on a subdued note overall. Cold-rolled is still likely to retain a small processing premium but will struggle to replicate the sharp profit upswings of 2023-2024. Supply side, seasonal maintenance expectations at integrated blast furnaces could intermittently floor hot-rolled coil supply; under persistently low profits, some cold-rolled lines at mills are showing a willingness to voluntarily cut production, which may provide a degree of support for cold-rolled processing fees. Demand will be the core variable steering profit direction. Traditional manufacturing is expected to undergo a seasonal recovery in the September-October peak season during H2, with downstream auto and home appliance sectors anticipated to sprint toward full-year production plans, offering some demand support. Yet uncertainty remains over the height of this round's end-use demand recovery. In the short term, absent strong pro-growth policies, the downstream demand recovery pace is likely to be moderate, and cold-rolled and hot-rolled profits will probably continue to consolidate near the break-even line. Raw material side, iron ore lacks a distinct narrative and broadly tracks finished steel price fluctuations. The second coke price cut has landed, easing cost support and creating room for profit recovery. If downstream peak-season stockpiling sentiment turns firm from late August and orders flow steadily, cold-rolled profits could see a phased recovery supported by demand, and the cold-rolled vs hot-rolled price spread could re-widen. Should the manufacturing recovery fall short of expectations, both cold-rolled and hot-rolled profitability will come under pressure simultaneously. Going forward, focus on auto production and sales data, downstream order status, and raw material price fluctuation trends; be alert to profit disappointments driven by a peak-season letdown. Data Source Statement: All data in this report, other than publicly available information, are derived from public information (including but not limited to industry news, seminars, exhibitions, corporate financial reports, broker reports, National Bureau of Statistics (NBS) data, customs import and export data, and various data published by major associations and institutions), market communication, and SMM’s internal database models. They are produced through comprehensive analysis and reasonable inference by the research team, are for reference only, and do not constitute decision-making advice. Shanghai Metals Market reserves the right of final interpretation of this statement and the right to adjust and amend its content based on actual circumstances.