There is an undercurrent behind the rebound of the "silver four" hot-rolled coil market

The steel market in April is known as the"Silver Four", but this year presents a complex and contradictorysituation. After a relatively dull first half, with the acceleration of theresumption of work and production in the manufacturing industry, the hot-rolledcoil market ushered in a wave of unexpected rebound, injecting some vitalityinto the slightly dull "peak season".

According to futures market data, on April21, the closing price of the main contract of hot-rolled coil futures on theShanghai Futures Exchange was 3,362 yuan/ton, up 38 yuan or 1.143% from theprevious trading day. At the same time, the contract's open interest increasedsignificantly by 204,220 lots, and the total open interest climbed to 1,404,600lots, showing that the divergence between long and short sides at the currentprice level has increased significantly. From the spot side, the market has basicallymaintained a synchronous rise pace. As of April 21, the average price of 4.75mmhot-rolled coil in 24 major markets across the country reached 3355 yuan/ton,up 22 yuan from the previous trading day, and the merchants' quotations tendedto be strong.

This rally is not accidental. Analyzing thedriving force behind it, on the one hand, comes from solid cost support. In thefield of coke, the second round of increase has been fully implemented, with anincrease of 50 yuan per ton of wet quenching coke and an increase of 55 yuanper ton of dry quenching coke. In addition, as the May Day holiday approaches,the pre-holiday replenishment demand of some steel mills is also beingreleased, which has built a solid bottom line of defense for the price of hot-rolledcoils. On the other hand, the pressure on the supply side is also quietlyeasing. As of April 16, the national social inventory of hot-rolled coils hasdeclined for five consecutive weeks, with a week-on-week decrease of 88,200tons to 3,398,600 tons. The orderly removal of inventory seems to be paving theway for supply and demand to move towards balance.

The market is more complex and cautious

In stark contrast to the moderate reboundin the futures market, many first-line market participants are not optimisticabout the market outlook. Since entering the "Silver Four", manyindustry insiders have felt the chill of "the peak season is notprosperous", the market trading atmosphere is not good, and the price ofcold and hot rolled coils has even fluctuated and fallen for a while. LiZhongshuang, general manager of Shanghai Ruikun Metal Materials Co., Ltd.,bluntly said in an interview with China Metallurgical News that the probabilityof a sharp rebound in the price of cold and hot rolled coils in the short termis unlikely, and the market will continue to consolidate. He believes that withthe passage of time, the logic of steel price operation is returning to thefundamentals of supply and demand itself from the cost side.

Behind this cautious sentiment is a deepconcern about downstream demand

On the supply side, the inertia ofincreasing production still exists. Some industry institutions predict thatChina's new hot-rolled coil production capacity will reach 9.3 million tons in2026. In the context of continued weak demand for construction steel, steelcompanies are tilting their production resources to plates, resulting in highsupply pressure in the plate market.

On the demand side, as the most importantdownstream of the hot-rolled coil automobile and home appliance industry, therecent data has frequently turned on red lights. According to data from theJoint Branch of Passenger Car Market Information, from April 1 to 6, the retailsales of the national passenger car market fell by 29% year-on-year, down 20%from the same period in March. According to the production scheduling datareleased by the industry online, the total production schedule of the three majorwhite electricity (air conditioners, refrigerators, and washing machines) inApril decreased by 3.6% compared with the same period last year, of which theproduction schedule of household air conditioners fell by 4.9% year-on-year andthe production of washing machines fell by 3.7% year-on-year. The fatigue ofconsumer terminals will undoubtedly be transmitted upstream, forming a directpressure on the consumption of hot-rolled coils.

In addition, changes in the export markethave also added new variables to the hot coil market. From January to February2026, China's hot-rolled coil exports were only 2.4353 million tons, a sharpdecrease of 57.28% year-on-year. On the one hand, this change stems from theexport licensing system making export behavior more standardized, and on theother hand, it is also affected by the geopolitical conflict in the MiddleEast, resulting in a decline in China's share of the Middle East market. Thecontraction of exports means that more resources will be forced to be digestedin the domestic market, which will undoubtedly further exacerbate the resourcepressure on the domestic market.

On the whole, the current hot-rolled coilmarket is at a delicate balance: cost support and inventory removal aresupported by prices, but weak downstream demand and contraction of exports aresuppressing the room for growth. The dominance of the market is quietlyshifting from cost-driven to the game of supply and demand. For the marketoutlook, the mainstream view in the industry is that the short-term market maycontinue to maintain a volatile pattern in the interweaving of long and short,and directional breakthroughs still need to wait for clearer macro guidance ordemand signals. In this critical window period of mixed information,practitioners need to pay more attention to the pace of macro policyimplementation and the changes in terminal procurement intentions in order tofind deterministic opportunities in the complex and changeable market.