Leading mills up flat rolled prices sharply

Tuesday, 06 February 2007 16:33:17 (GMT+3)   |  
       

SteelOrbis Shanghai Over the past week, many Chinese mills released their flat rolled prices for February. In particular, the leading mills such as Shagang raised their ex-factory prices by a big margin, boosting up hot rolled prices and also giving the cold rolled market a push forward. The market last week saw a good trading performance with a slight increase in inventory. On February 5, the average price quotation of 5.75 mm x 1,500 mm x C SS400 in Tianjin, Shanghai and Lecong was up RMB 110/mt ($14) to RMB 4,100/mt ($528/mt), while that of 2.75 mm x 1,250 mm x C Q235B was up RMB 63/mt ($8/mt) to RMB 4,323/mt ($557/mt). Meanwhile, the average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 decreased RMB 17/mt ($2/mt) to RMB 5,000/mt ($644/mt), while that of 1.0 mm x 1,250 mm x C ST12 was down RMB 10/mt ($1) to RMB 4,990/mt ($643/mt). With regard to hot rolled, Shagang announced its ex-factory prices for February on the first day of the month, with the biggest increase range reaching RMB 380/mt ($49) - far higher than the market expectation. Affected by this, Wuhan Steel and Anshan Steel also hiked their HR prices considerably. Subsequently, some other mills followed this trend and adjusted their ex-factory prices upwards from the previous levels. Most mills have obtained many orders for February and March, both from home and abroad. Furthermore, current market inventory is still at a low level, while very few new HR production lines will commence operations in the first half of 2007. It is in this context that the mills sharply hiked their ex-factory prices. Looking at the market performance last week, we see that the market players gradually accepted the latest ex-factory prices. On the one hand, the traders were active in making purchases. On the other hand, though end-users had seemed unwilling to accept rising prices previously and limited themselves to small purchases, after the mills' upward price adjustment, they also began to prepare their stocks. Therefore, the brisk level of commercial activity constituted the basis for the market price increase. However as the domestic prices are very high currently, and considering that it is hard for the market to fully release demand around the period of the Spring Festival (18-25 February), traders may prefer to keep inventories for sale at a later date in the domestic market, rather than exporting now. After this latest round of price rises, the market is now likely to decline a little, fluctuating as it goes down. However, the overall trend for the market is expected to be upward throughout the first half of this year. As regards cold rolled, influenced by the increased ex-factory prices, the market saw a halt to its decline and began to rebound last week. During the beginning of the past week, the market continued the downward trend of previous times, with a slight decline in Shanghai and stable movement in Tianjin and Lecong. Then, in the middle of the week, due to the raised ex-factory prices of Wuhan Steel and Anshan Steel, the Shanghai market saw a rebound and greater stability. Since the increase range for cold rolled prices is small, the future market is expected to move in a relatively stable manner, showing an overall steady upward tendency. The figures released by the China Iron & Steel Association during the week indicated that China's 2006 output of HR coils totaled 68.2017 million mt, up 16.6793 million mt or 32.37 percent year on year. Meanwhile, HR imports reached 2.2338 million mt, down 222,000 mt or 9.04 percent; exports reached 6.1487 million mt, up 3.3723 million mt or 121.46 percent. Newly-added HR supply last year totaled 64.2868 million mt in the domestic market. China's 2006 output of CR coils totaled 26.0498 million mt, up 8.7997 million mt or 51 percent year on year. Meanwhile, imports reached 4.464 million mt, down 3.4677 million mt or 43.72 percent; exports reached 1.9826 million mt, up 1.2823 million mt or 183.11 percent. Newly-added supply in the Chinese domestic market last year totaled 28.5312 million mt. The above data show that while China achieved net exports of HR products in 2006, the situation of net imports of CR coils still continues.

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