China’s hot-rolled coil (HRC) market faced mounting challenges since late March 2026, as earlier supportive factors such as cost pressure from Middle East tensions and expectations tied to the Two Sessions have gradually weakened. With crude oil prices fluctuating at high levels, support from raw materials, including iron ore and coking coal, has eased, shifting focus back to real demand.

However, demand recovery in April has fallen short of expectations. Apparent consumption has declined from a year earlier, while inventories have climbed to a nearly five-year high. Slower retail growth in downstream sectors such as automobiles and home appliances highlights weak domestic demand.

At the same time, the hot-rolled coil (HRC) market is currently facing severe speculative inventory pressure. As futures prices rebounded more strongly than spot prices in March, the market remained in a prolonged contango. In addition, warehouse receipts on the Shanghai Futures Exchange are at historically high levels. With the May contract delivery period approaching, these large inventories are expected to place heavy pressure on both the spot market and near-month contracts.

China’s hot-rolled coil market remains weak in the short term but may see a “dip-then-rebound” trend in the second half. Demand is expected to be supported by policy, while resilient external demand and policy measures on capacity control may help the market stabilize and recover later in the year.