After the prior week’s 2.2% slide, hot-rolled coil (HRC) production among the 37 Chinese steelmakers regularly surveyed by Mysteel rebounded again by 45,400 tonnes or 1.5% on week to 3.02 million tonnes during July 16-22, as some mills that had previously taken maintenance stoppages resumed production, Mysteel Global learned.

The average capacity utilization rate for strip mills among the surveyed 37 steelmakers edged up by 1.17 percentage points on week to 77.16% during the latest survey week, while the average operation rate stood unchanged at 79.69%, according to the survey findings.

The rise in output, plus tepid sales, caused HRC inventories at mills to move higher as well, with stocks held by the 37 sampled mills increasing by 23,900 tonnes or 3.1% on week to 798,400 tonnes as of July 23, according to Mysteel's assessment.

On the demand side, recent rainy weather and sweltering heat across several parts of China in the ongoing summer lull continued to weigh on end-users' appetite for hot coils. As such, the decline in retail HRC stocks also slowed, with the tonnage piled at the 194 commercial warehouses Mysteel monitors nationwide thinning by 5,400 tonnes or 0.12% on week to 4.67 million tonnes by July 23, and the stocks remained 32% higher than the year-prior level.

The cost-side support eased slightly after the first round of coke price cuts since April took effect on July 22. This, together with the weakness in near-term demand for hot coils, caused HRC prices in both derivatives and spot markets to lose upward momentum, ending the previous two-week rally.

On July 24, the most-traded HRC contract for October delivery on the Shanghai Futures Exchange closed at Yuan 3,289/tonne ($486/t), lower by Yuan 37/t or 1.1% from the settlement price one week earlier, the exchange's data showed.

The same day, Mysteel's assessment of the national spot price of Q235B 4.75mm HRC came in at Yuan 3,303/t including the 13% VAT, down by Yuan 27/t or 0.81% on week.