Flats market expects decline despite mills' price hike

SteelOrbis Shanghai Chinese hot and cold rolled product exports are still strong, and the domestic markets revived slightly when the prices fell further. Especially in Shanghai market, quite a lot of deals were concluded at low price levels on March 20, which led prices to rebound slightly. Sources have reported that Chinese steel mills' export volume for April shipments is still large. Steelmakers have began preferring exports further with the recent price fall in domestic markets. Meanwhile, some Chinese traders have started importing small quantities of cold rolled thin products which are in short supply in China. The import cargoes of the traders are generally in a few thousand metric tons. For instance, a trader in the Lecong market imported nearly 1,000 metric tons of 0.3-0.4 mm cold rolled coils from Taiwan at around $550/mt CFR. As the steel consumers did not accept the prices which climbed up so rapidly, local traders have continued cutting down their prices last week. Especially, cold rolled product prices dropped largely. On March 20, on the HR side, the average price of 5.75 mm x 1,500 x C SS400 in was down RMB 84/mt ($10) weekly at RMB 3,573/mt ($445), that of 2.75 mm x 1,250 x C SPHC was down RMB 50/mt ($6) at RMB 3,883/mt ($484), while imported 2.0mm x 1,250 x C 08YU is down RMB 50/mt ($6) at RMB 4,000/mt ($498). On the CR side, the average price of 1.0 mm x 1,250 x 2,500 ST12 was down RMB 183/mt ($21) weekly at RMB 5,067/mt ($631), that of 1.0 mm x 1250 x C ST12 was down RMB 100/mt ($11) at RMB 5,033/mt ($627), and imported 0.6 mm x 1250 x C 08YU was down RMB 167/mt ($20) at RMB 5,050/mt ($629). Meanwhile major steelmakers Baosteel and Benxi Steel increased their prices. Therefore, traders were willing to pile up products from the market before the impact of ex-factory price increases were felt. Consequently the market saw some activity yesterday and on March 17. Especially, many traders were willing to buy large quantities of 7.5 mm HR products in Shanghai market on March 17 when they were sold at RMB 3,500/mt ($435). Some traders stated that hot and cold rolled product market prices might rebound in the short term; however the increase range would not be as large as before. In general, Chinese hot and cold rolled product prices are expected to keep the weak trend in the short term as the consumers are not even willing to accept current price levels. Meanwhile, most traders have highy inventories and there are not many shipments from steelmakers to traders recently. Even if the prices would go up slightly, the number of deals that might be concluded at those levels is expected to be very low.