Chinese hot-rolled coil production rebounded in August amid stable end-user demand and decent margins, according to some market sources. HRC serves as an indicator of the flat steel market, with manufacturers as the primary end users.

NBS data showed that the production of medium-thick HRC in July fell 4.7% month over month to 18.414 million mt due to seasonal factors, but still 3.2% higher year over year. According to some market sources, the HRC production as of Aug. 28 rebounded by 3.1% from early August and remained higher year over year.

However, along with the rising production, China’s domestic profit margins for HRC have narrowed since around mid-August.

The Chinese domestic profit margins for hot-rolled coil currently fell to around Yuan 70-80/mt ($9.8-$11.2/mt), down from around Yuan 200/mt in mid-August and over Yuan 300/mt in early August, market sources said.

According to some sources, September is traditionally a strong season for the manufacturing sector, so the sector’s steel demand should be better than in August. They expect HRC profit margins and prices could still rebound in September, but the upside may be limited due to the increase in flat steel supply.