During the past week, the Chinese CRC market has maintained its downward trend of the previous week, though at a slower pace. Meanwhile, inventory in the main Chinese cities has continued to increase, market demand is weak and the general transaction situation is not satisfactory.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
1.0 mm x 1,250 mm x C | SPCC | 5,707 | -26 | 837 | |
CRS | 1.0 mm x 1,250 mm x 2,500 mm | SPCC | 6,043 | -14 | 886 |
May is traditionally characterized by low transaction volumes. Domestic downstream industries such as automotive and household appliances are currently indicating weak demand, thereby dragging down CRC market prices. In addition, influenced by the export situation, Chinese domestic steelmakers have abundant inventories in hand and spot market supplies have also increased. In a context of insufficient market demand, traders are being forced by inventory pressure to lower prices and sell off materials, and this is the major cause of price decreases in the CRC market.
Due to the rapid price decrease, the profit margin of inventory held by many traders has already diminished significantly, and so Chinese CRC market prices may not decline much further in the immediate short term. However, with the debt crisis in Europe impacting the international financial market and with traders expected to withdraw more capital from the market as the end of the current month draws closer, the trend of future prices still remains uncertain.
During the past week, CRC inventory in the main Chinese cities has continued to increase. On May 21, aggregate CRC inventory in the main Chinese cities was 1,341,860 mt, up 55,050 mt week on week. Eastern Chinese market has registered the greatest increase in CRC inventory, while a small decrease has been observed in the northern Chinese market. On May 21, CRC inventory in Shanghai stood at 453,240 mt, up 29,430 mt week on week.
According to its website, the People's Bank of China plans to issue RMB 120 billion central bank bills by tender on Thursday. The amount is far less than the demand of RMB 200-300 billion reported from the market. In this context, overseas banks have lowered their expectations for an increase in Chinese interest rates. Some insiders say the Chinese government has concerns about the European debt crisis situation, and so the tightening of the country's monetary policy may see a relaxation to a certain degree.
Generally speaking, it is expected that in the coming period there may be some small price decreases in the CRC market, but that the market in general will trend sideways.