Domestic Hot-Rolled Coil Transactions Maintain Year-on-Year Growth, Showing Resilient Market Demand

Recently, China's domestic hot-rolled coil market has remained relatively stable overall. Although market transactions have experienced some fluctuations due to seasonal factors, year-on-year trading volumes have continued to increase, indicating that downstream demand has not experienced a significant contraction. As August progresses into its second half, the impact of high temperatures in some regions is gradually easing. Production activities in downstream industries such as manufacturing, machinery processing, automobiles, and home appliances are expected to recover gradually, which may further support demand for hot-rolled coil products.

In terms of market transactions, current purchasing activity is still mainly driven by essential demand. Most downstream companies are adopting a need-based purchasing strategy and remain highly sensitive to price movements. When HRC spot prices rise, some end users tend to adopt a wait-and-see approach and postpone purchases until prices stabilize or decline. Therefore, although overall trading volumes have improved year on year, the market has not yet entered a phase of sustained and large-scale restocking.

On the supply side, domestic HRC production remains relatively high, while steel mills continue to maintain relatively stable production levels. With downstream demand not yet fully recovered, high production levels could slow the pace of inventory reduction. If steel production remains high while demand recovers more slowly than expected, both steel mill inventories and social inventories may remain at relatively elevated levels, creating resistance to further HRC price increases.

Nevertheless, HRC remains an important raw material for automobiles, machinery manufacturing, home appliances, steel structures, and various other manufacturing industries. These sectors continue to provide a relatively stable underlying demand base for hot-rolled products. As manufacturing orders gradually recover during the second half of the year and some downstream industries enter their traditional peak demand season, market participants maintain expectations for a gradual improvement in HRC demand.

Market sentiment is also an important factor influencing recent HRC price movements. Steel mills can help stabilize market expectations through adjustments to ex-mill prices, while traders can manage inventory levels more actively. If market transactions continue to maintain year-on-year growth and both steel mill and social inventories gradually decline, HRC prices could receive additional support. Conversely, if demand recovery falls short of expectations and inventories continue to accumulate, the potential for further price increases will remain limited.

Overall, China's domestic HRC market is currently undergoing a gradual adjustment in supply and demand. The year-on-year increase in transactions demonstrates that underlying market demand remains relatively resilient, while high inventories and relatively strong production levels continue to limit the potential for significant price increases.

In the short term, the HRC market is expected to remain volatile, with prices fluctuating between expectations of improving demand and continued inventory pressure. In the medium to long term, the market outlook will largely depend on the recovery of manufacturing demand, changes in steel mill production, the pace of inventory reduction, downstream purchasing activity, and developments in both domestic and international steel markets.