CR prices increase continuously in major Chinese markets

• Weekly review of local market Cold rolled product prices continue ascending in China. Local market responded immediately to major Chinese mills' new price increases for overall steel products. The daily markup of cold rolled products ranges between RMB 0 and 300/mt. And the short supply of products failed to meet the demand for certain specifications. Therefore, on March 1, 0.5 mm cold rolled coil prices ranged between RMB 4,700-5,300/mt ($585-660) while the range was RMB 4,500-5,150/mt ($560-641) on February 28. During this week, in the four major cities - Shanghai, Hangzhou, Guangzhou and Wuhan - the prices of four different cold rolled products with 0.5 mm rose respectively by RMB 150, 250, 350 and 180. Compared to the prices of February 05, 2006 –which marks the end of Chinese Spring Festival- the range of increase even goes up to RMB 350,500,550 and 600/mt respectively. • Import & export situation Cold rolled product exports from China continue expanding while their imports continue shrinking. More and more imported cold rolled products are replaced by the same or similar ones made in China. Although the export prices rose by USD 25 - 40 through last week, the CFR prices of cold rolled coils from China are still lower than the prices in the destination countries. Here are some present CFR prices of cold rolled products from China: $530-580/mt CFR South Korea, $580-645/mt CFR USA, $510-550/mt CFR EU (major countries). Meanwhile the CFR China prices of cold rolled products are widely spread between $550-750/mt. The low-grade imports are mainly from CIS, and the high-grade imports are mainly from EU or USA to meet the special demands in China. • Analyses for the present and near future. The key reasons leading to the continuous increase in local markets are: 1. Sharp increase in non-ferrous metal prices: In first two months of 2006, zinc almost increased by 33%, aluminum and copper both increased by nearly 25%. 2. Demand from downstream industries such as construction is gradually increasing as the weather is getting warmer. 3. Traders started piling up inventories for future business. 4. Major steel makers in China increased factory prices consecutively in a short time. 5. International cold rolled coil prices are still higher than that of China. This is the critical point in the expansion of Chinese cold rolled product exports. The status quo will continue in the near future, thus the upward trend will not easily change in the following weeks. However some traders are hesitated to make new orders in April after Baosteel's RMB 600/mt ex-factory price increase for cold rolled products. The impact of traders' attitude is unclear yet but deserves paying attention.