Cost Support & Fundamental Improvement: Hot-Rolled Coil Prices Continued to Strengthen in April As of April 30, the most-traded hot-rolled coil futures contract closed at 3,425 points, up 131 points MoM from March 31. In April, SMM's national average spot price for hot-rolled coil was 3,321.78 yuan/mt, up 54.91 yuan/mt MoM (1.68%). HRC prices continued to rise in April, mainly due to relatively stable cost support. Additionally, since the start of April, on one hand, semi-finished products export orders were robust, with some steel mills prioritizing delivery of semi-finished product orders, thereby easing supply pressure in the HRC market; on the other hand, amid the peak season, HRC demand release was strong, driving rapid HRC inventory drawdown and significantly easing supply-demand imbalances. Before mid-May, HRC prices are expected to continue fluctuating at highs; in late May, attention turns to export support and the extent of demand pullback Fundamentals, few new maintenance shutdowns have been announced so far, and May HRC production is expected to rebound MoM. However, considering that some steel mills are still actively delivering earlier semi-finished product and HRC export orders, the supply rebound pressure is expected to be manageable. Demand side, the average apparent demand for HRC tracked by SMM in April was 3.3961 million mt, up 7.52% MoM and down 2.19% YoY. Since the start of April, HRC demand climbed rapidly, mainly driven by a simultaneous rebound in export orders and domestic downstream demand in China. For May, historically apparent demand for the five major steel products tends to peak and pull back around Labour Day holiday. Combined with weakening domestic trade demand in some downstream industries, further upside room for May HRC demand is expected to be limited, with overall demand likely edging down slightly MoM from April, and apparent demand levels falling below the same period last year. In the short term, downstream restocking demand expectations remain after the Labour Day holiday, coupled with expectations of a third round of coke price increases, and HRC prices are expected to fluctuate at highs for 1–2 weeks after the holiday. From mid-to-late May, steel demand faces challenges as the traditional peak season winds down, and the steel supply-demand imbalance may widen MoM, limiting further upside room for steel prices. Other aspects, attention should be paid to export order support and the extent of domestic demand pullback.

Social inventory of HRC was 3.0182 million mt this week, down 151,200 mt from the previous week (-4.77% WoW, +41.59% YoY, +17.81% YoY on a lunar calendar basis). Mill inventory of HRC was 1.0153 million mt this week, down 1,500 mt from the previous week (-0.15% WoW, -7.28% YoY, -8.64% YoY on a lunar calendar basis). Total HRC inventory was 4.0335 million mt this week, down 152,700 mt from the previous week (-3.65% WoW, +25.00% YoY, +9.81% YoY on a lunar calendar basis).

Shanghai HRC inventory was 519,700 mt this week, down 26,900 mt WoW, a decrease of 4.92%; up 65.25% YoY (solar calendar) and up 55.51% YoY (lunar calendar).

Ningbo HRC large-sample inventory was 451,000 mt this week, down 34,000 mt WoW (-7.01%), up 17.23% YoY (lunar calendar basis).

Zhangjiagang HRC port inventories were 321,000 mt this week, down 24,000 mt WoW, a decline of 6.96%; the solar calendar YoY decline was 15.53%, and the lunar calendar YoY decline was 25.35%.

Shanghai HRC inventory this week was 546,600 mt, down 30,500 mt WoW, a decrease of 5.29%; up 64.39% YoY (solar calendar) and up 62.78% YoY (lunar calendar).

Lecong HRC inventory this week was 825,700 mt, down 24,600 mt WoW, a decrease of 2.89%; up 6.35% YoY (solar calendar), down 2.92% YoY (solar calendar).

Zhangjiagang HRC inventory was 345,000 mt this week, down 17,000 mt WoW, a decline of 4.70%; the YoY decline was 12.66% on a solar calendar basis and 21.59% on a lunar calendar basis.

Lecong HRC inventory this week was 850,300 mt, down 66,100 mt WoW, a decrease of 7.21%; up 1.58% YoY (solar calendar), down 7.99% YoY (solar calendar).

Shanghai HRC inventory this week was 577,100 mt, down 17,400 mt WoW, a decrease of 2.93%; up 72.68% YoY (solar calendar), up 62.75% YoY (lunar calendar).