China’s manufacturing activity in July remained in contraction for the third consecutive month, the National Bureau of Statistics said July 31, but market sources said seasonal recovery in the manufacturing sector is expected in late August and September.
However, the latest bleak passenger car retail numbers could upset manufacturing steel growth momentum during the later part of the year, sources said. At the same time, rising flat steel supply could also weigh on the steel markets, they added.
HRC output and inventories
Production of medium-thick HRC increased by 3.4% on the year in June to 19.02 million mt, according to the NBS data. In the first half of 2024, the medium-thick HRC output increased by 5.5% on the year to 109.13 million mt.
With the production higher than the end-user demand, the HRC inventories at spot markets monitored by China Iron & Steel Association were 19.5% higher on the year on July 20 at 2.39 million mt.
“If seasonal steel demand turns out to be weaker than expected in late August, the HRC inventories may become even higher and exert greater downward pressure on the market……I personally don’t think there will be much growth in steel demand in China for the remainder of 2024, so HRC output may have to decline for the market to stabilize,” said a market participant