Chinese domestic HRC hits seven-year low

What's happening?

Chinese domestic hot-rolled coil (HRC) prices have fallen to their lowest level in seven years, as demand continues to slump amid the country's ongoing COVID-19 lockdowns and a weak property market.

According to data from Mysteel, the average price of HRC in China was 4,100 yuan ($616) per ton on May 12, down 2.3% from the previous week and 33% from the same period last year.

This is the lowest price for HRC in China since May 2015, when prices were hit by a global steel glut.

Why is this happening?

The decline in HRC prices is being driven by a number of factors, including:

• Weak demand from the construction sector, which is being hit by the COVID-19 lockdowns and the property market downturn.
• Increased supply from Chinese steel mills, which have been ramping up production in recent months.
• A global economic slowdown, which is reducing demand for steel from China's export markets.

What does this mean for the steel industry?

The decline in HRC prices is putting pressure on Chinese steel mills, which are already facing high costs and weak demand.

Some mills have already begun to cut production, and others are expected to follow suit in the coming months.

The decline in HRC prices is also likely to have a negative impact on global steel prices, as China is the world's largest producer of steel.