SteelOrbis Shanghai
Following the stable movement throughout the previous two weeks, the Chinese hot rolled market dropped again over the past week under the influence of decreased ex-factory prices of mills, accompanied with sluggish commercial activity. Meanwhile, cold rolled prices still continued the previous sliding trend. Against the background of rising market inventory, the general market atmosphere became worse.
On July 02, the average price quotation of SS400 grade 5.75 mm x 1,500 mm x C hot rolled coil in Tianjin, Shanghai and Lecong was down RMB 83/mt ($11/mt) to RMB 3,620/mt ($476/mt), while that of 2.75 mm x 1,250 mm x C Q235B has declined RMB 94/mt ($12/mt) to RMB 3,983/mt ($524/mt).
Meanwhile, the average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 has decreased RMB 53/mt ($7/mt) to RMB 4,787/mt ($630/mt), while that of 1.0 mm x 1,250 mm x C ST12 was down RMB 40/mt ($5/mt) to RMB 4,767/mt ($627/mt).
However, in the export market the prices were relatively stable with hot rolled coil offers at around $530-540/mt FOB and cold rolled coil prices at around $590-600/mt FOB last week. Chinese hot rolled coil export offers are still higher than those in the domestic market of South Korea. Besides, Ukrainian offers to Europe and Middle East are more comptetitive compared to these products. As a result, the demand for Chinese origin flat rolled products is not very strong for the moment. Nevertheless, with the latest ex-factory price decreases in China, the export offer levels may decrease further and start to receive a strong demand from foreign markets.
In the domestic market, the past week is the last week of June, during which many mills announced their price policies for July, posting a relatively big downward adjustment in flat rolled products. In particular, since the traders suffered a great loss because of Shagang's high ex-factory price level for May and June, this mill had to lower the July price considerably by RMB 670/mt ($88/mt) to RMB 3,610/mt ($475/mt) so as to ensure the normal sales operation.
As regards hot rolled, the domestic market saw an overall drop during last week. In Tianjin and Shanghai markets, prices showed a remarkable decrease; while in Lecong market, since one of the biggest local mills - Liuzhou Steel was busy rebuilding their production line, releasing no supply to Lecong market, the local prices registered a stable performance. But, coming up to the end of the week, Liuzhou Steel finished the rebuilding work and started to provide supply to the market, thereby the market prices also slided down.
With regard to cold rolled, the Chinese market continued the slight downward movement over the past week. Affected by the weakened demand, the market trading volume was extremely low. Moreover, the sharp price drop in hot rolled thin coils reduced the material costs for cold rolling production, which further contributed to the increasing market pressure.
Regarding the future, although hot rolled prices will continue to move down, no significant fall is expected in the market in the short run; while cold rolled hasn't showed any sign of decline stopping, thereby the market will still remain on a downward trend.
The latest data showed that China's Jan-May hot rolled supply totaled 31.11 million mt, up 28.6 percent year on year. The growth is 10.2 percentage points higher compared with that of the same period last year. Meanwhile, cold rolled supply amounted to 14.01 million mt, up 31.2 percent, which is 17 percentage points higher compared with that of the same period last year.