Chinese HR market analysis (Oct. 10-17)

Tuesday, 18 October 2005 08:16:00 (GMT+3)   |  
       

Chinese HR market analysis (Oct. 10-17)

Market players placed high expectations on the steel market prior to the National Holiday in China, thinking that steel prices, including hot rolled sheet/coil (HRS&C), would go up. Prices in some markets slightly increased two days before the holidays. During the holidays, however, leading steelmakers announced new pricing policies. Most of these new policies were price reductions. For example, based on its price adjustment in September, Tangshan Steel cut its HRS&C prices by RMB 200-230/ton ($25-28). At the same time, steelmakers delivered their products to the markets one after the other. Sources reported that Tangshan Steel and Lianyuan Steel delivered more than 20’000 tons of new products to Shanghai and Lecong, imposing greater pressure on the already high HRS&C inventory. HRS&C prices in China’s main markets – Tianjin, Shanghai and Lecong – plummeted considerably. Traders initiated their overall price reductions due to a lack of activity, and Shanghai took the hardest hit with a RMB 150/ton ($18) slide in one day. In short, prices in these three major markets are at a low level. In some markets, HRS&C prices are even lower than rebar products. Currently, traders have stopped importing new products. However, products ordered earlier are still arriving in China. For instance, Thailand and Russian-origin products ordered in June and July have arrived in Shanghai and Lecong. On the export side, although output in North America and Europe has declined and prices have started to bounce back, the opportunities for China to export are still limited. In the beginning of 2005, demand from end users was considered normal. End users purchased their products according to their needs instead of stockpiling. The current HRS&C inventory is at a high level. In Shanghai for instance, HRS&C inventory is around 780’000 tons, double the normal level. Yet steelmakers nationwide continue to churn out product. Therefore, demand will not increase in line with supply, meaning supply will continue to exceed the demand. Under such a soft market, the China Iron and Steel Association (CISA) plans to hold a seminar this Friday (October 21) to discuss with leading steelmakers nationwide ways to stabilize the domestic steel markets. Traders hold a pessimistic attitude towards the future of the market, and most of them indicate that HRS&C prices are likely to go down slightly. They still hold out hope that steelmakers will play their part. On the whole, the HRS&C market trend is not promising in the short run. Even if they stop declining, HRS&C prices are unlikely to increase considerably due to the high inventory level. However, there is a possibility that market prices will bounce back if market players do their part in the market, namely adjusting prices and reducing output levels. SteelOrbis Shanghai

Similar articles

Major steel and raw material futures prices in China - March 29, 2024

29 Mar | Longs and Billet

Major steel and raw material futures prices in China - March 28, 2024

28 Mar | Longs and Billet

Major steel and raw material futures prices in China - March 27, 2024

27 Mar | Longs and Billet

Major steel and raw material futures prices in China - March 26, 2024

26 Mar | Longs and Billet

Major steel and raw material futures prices in China - March 25, 2024

25 Mar | Longs and Billet

Stocks of main finished steel products in China down 0.6 percent in mid-March

25 Mar | Steel News

Major steel and raw material futures prices in China – March 22, 2024 

22 Mar | Longs and Billet

Major steel and raw material futures prices in China – March 21, 2024 

21 Mar | Longs and Billet

Major steel and raw material futures prices in China – March 20, 2024 

20 Mar | Longs and Billet

Major steel and raw material futures prices in China – March 19, 2024 

19 Mar | Longs and Billet