SHFE HRC STEEL - INTELLIGENCE REPORT

Shanghai Futures Exchange Hot Rolled Coil | Week 6 - June 2026 | Generated May 30, 2026

(FACT: SHFE data) SHFE HRC futures entered a corrective phase in late May 2026, sliding from a May 6 high of CNY 3,530/mt to CNY 3,393/mt by May 28, as coking coal momentum faded and property sector constraints reasserted themselves. (ESTIMATE: analyst consensus) The Q2 2026 quarterly average of CNY 3,407/mt represents a +2.8% recovery from Q1 2026 (CNY 3,313/mt), driven by supply discipline and cost support rather than demand. With global overcapacity at 700 Mt by 2027E and Chinese demand contracting 1%, the base case targets CNY 3,000-3,300/mt through Q3 2026.

Board Brief
SHFE HRC Close (May 28)CNY 3,393/mt (-3.9% WoW)
Q2 2026 Avg (to date)CNY 3,407/mt (+2.8% vs Q1)
Global HRC BenchmarkUSD 1,186/t (+5.24% MoM)
China Inventories-4.6% period; +14.5% YoY
China Demand 2026E-1.0% (World Steel Assn)
Global View

Macro & Policy FACT

  • World Steel SRO Global demand to rebound +1.3% to 1,773 Mt in 2026.
  • OECD Sep 2025 Overcapacity to surge past 700 Mt by 2027 (+165 Mt).
  • S&P Global Jan 2026 EU CBAM enforced from Jan 1, 2026; payments due 2027.
  • Eurometal Oct 2025 EU safeguard Jul 1: quota halved, duty 50%.
  • Steel Market Update US Section 232 tariffs at 50% insulate at ~$1,146/t.
  • JP Morgan Sep 2025 Germany EUR 500B infrastructure as bull catalyst.

Raw Materials ESTIMATE

  • Iron ore (62% Fe CFR): $90/t in 2026E, down from $100/t in 2025.
  • Coking coal (Aus FOB): $180/t through 2026-2028.
  • Ferrous scrap (Turkey CFR): Rangebound $350-380/t (S&P Global).
  • Declining input costs offer margin relief but do not lift steel prices while overcapacity persists.
Price Trend Charts

Quarterly Averages FACT

Q2 2024CNY 3,827/mt
Q3 2024CNY 3,524/mt
Q4 2024CNY 3,565/mt
Q1 2025CNY 3,467/mt
Q2 2025CNY 3,204/mt
Q3 2025CNY 3,374/mt
Q4 2025CNY 3,297/mt
Q1 2026CNY 3,313/mt
Q2 2026 (YTD)CNY 3,407/mt

Annual Averages FACT

2020CNY 3,468/mt
2021CNY 4,898/mt
2022CNY 4,198/mt
2023CNY 3,832/mt
2024CNY 3,577/mt
2025CNY 3,335/mt
2026 (YTD)CNY 3,357/mt
Signal Analysis

Bearish Signals

FACT
Chinese property sector contraction continues, suppressing construction demand for HRC.
SteelOrbis Inventories remain +14.5% YoY despite mid-May drawdown of 4.6%.
OECD Global steel overcapacity projected at 700+ Mt by 2027.
Spot buying remains cautious; futures-led rallies fail to translate to physical market.

China viewpoint: Supply ample, demand soft, inventories elevated. Bearish near-term with downside to CNY 3,000/mt.

Neutral Signals

ESTIMATE
Raw material costs (iron ore $90/t, coking coal $180/t) provide a price floor but no upside catalyst.
S&P Global EU CBAM/safeguard expected to support European prices; limited near-term SHFE impact.
China production controls (Tangshan/Hebei) provide periodic support but inconsistent enforcement.

Europe viewpoint: Regulatory tightening (CBAM + safeguard) creates price floor. EU prices may decouple from Asian benchmarks. +3.2% demand growth expected in 2026.

Bullish Signals

SPECULATION
World Bank Global infrastructure stimulus (Germany EUR 500B, US IRA) supports medium-term demand.
Supply discipline and production cut expectations among Chinese mills may tighten availability.
Global HRC benchmark at USD 1,186/t (+40.9% YoY) signals supportive global steel cycle.

North America viewpoint: 50% Section 232 tariffs insulate US market at ~$1,146/t. Steady auto/energy demand. Minimal direct SHFE impact but supportive for global pricing.

Regional Breakdown

China FACT

Supply ample. Mills resume post-LNY output. Production controls periodic. Exports as pressure valve. Demand soft from construction (property downturn); gradual auto/machinery recovery insufficient. Viewpoint: Bearish near-term.

Europe ESTIMATE

CBAM from Jan 2026. Safeguard tightening Jul 1 (quota halved, duty 50%). German EUR 500B stimulus. Demand +3.2% in 2026E. Viewpoint: Bullish medium-term; regulatory floor forming.

Americas / Asia ex-CN ESTIMATE

US: 50% tariffs insulate at ~$1,146/t. India: HRC ~$631/t, mills lean on exports. Japan/Korea cautious. Viewpoint: US bullish; Asia ex-China bearish.

Cost Impact & Spend Exposure
Spot (May 28)CNY 3,393/mt
Q1 2026 AvgCNY 3,313/mt
Q2 2026 Avg (YTD)CNY 3,407/mt
2025 Full Year AvgCNY 3,335/mt
YoY (May 2025 to May 2026)CNY 3,451 to 3,393 (-1.7%)
Iron Ore 62% CFR 2026E$90/t (down from $100/t)
Spend Exposure: For 10,000 mt/month, Q1 avg (CNY 3,313) vs current (CNY 3,393) = +CNY 800K/month. Late-May selloff to CNY 3,046 suggests potential savings of CNY 2.5-3.0M/month if deferred.
Scenario Framework

Bull Scenario (20% probability) - Target: CNY 3,500-3,700/mt

Catalyst: China announces aggressive property stimulus or fresh infrastructure. Production controls enforced strictly. Coking coal spikes above CNY 1,200/t. Duration: 4-8 weeks. Key risk: Rally fades without spot demand validation.

Base Scenario (55% probability) - Target: CNY 3,000-3,300/mt

Catalyst: Gradual destocking continues. Demand soft-to-moderate. Raw material costs provide floor. EU regulatory changes limited near-term SHFE impact. Duration: Through Q3 2026. Key risk: Downward drift as overcapacity erodes cost support.

Bear Scenario (25% probability) - Target: CNY 2,700-3,000/mt

Catalyst: Property sector worsens materially. China exports face EU tariff escalation. Iron ore collapses below $80/t. Global recession impacts industrial demand. Duration: 8-16 weeks. Key risk: Margin compression forces distressed selling.

Decision Matrix
Action Timing Risk Level Rationale
Delay spot procurement Jun 1-21 Low Momentum bearish; June open at CNY 3,046 provides downside target
Hedge with SHFE shorts Immediate Medium Cost support at CNY 3,000; stop-losses above CNY 3,300
Lock term contracts at CNY 3,200-3,300 Jun 15-30 Medium If bear case fails, CNY 3,200 offers fair value
Diversify sourcing ex-China Ongoing High EU/NA tariff divergence creates two-tier market
Monitor iron ore / coking coal Weekly Low Raw material cost floor is key support level

Forward Recommendation

  • Short-term (1-4 weeks): Hold off spot purchases. Late-May selloff intact; June opened at CNY 3,046. Test of CNY 3,000 plausible in 2-3 weeks. Procure for essential needs only.
  • Medium-term (1-3 months): Target CNY 3,100-3,200 for restocking. Cost support from iron ore ($90/t) and coking coal provides floor. Use limit orders.
  • Structural (6-12 months): Prepare for two-tier pricing. Chinese HRC may trade at discount to Western HRC. CBAM costs estimated EUR 60-90/t from 2027.
Data Transparency
SHFE HRC LatestCNY 3,393/mt (May 28, 2026)
Data Sourcerzzro.com prices.json / SHFE settlement
QuartersQ2 2024 - Q2 2026 (cutoff: May 1, 2024)
Global HRCUSD 1,186/t (TradingEconomics, May 28)
China InventorySteelOrbis mid-May: -4.6% / +14.5% YoY
Demand ForecastWorld Steel Assn SRO Oct 2025
Methodology(SPECULATION: forward projections) Quarterly averages from daily SHFE settlement closes

SHFE HRC Intelligence Report (C) 2026 rzzro.com | Internal procurement decision support

Sources: SHFE, CEIC, Kallanish, TradingEconomics, SteelOrbis, World Steel Assn, OECD, S&P Global, Steelonthenet.com

Generated: May 30, 2026 | Week 6 - June 2026

Labels: FACT verified | ESTIMATE consensus | SPECULATION projection