SteelOrbis Shanghai
In order to push as many goods through customs before April 15, mills and traders rushed their products to the ships or, failing that, to the bonded areas at the ports, thus leading to a decrease in both market supply and inventory levels. Hot rolled product prices continued to go up, while cold rolled prices kept moving on a stable trend against a background of flat market performance.
On April 16, the average price quotation of SS400 grade 5.75 mm x 1,500 mm x C hot rolled coil in Tianjin, Shanghai and Lecong has risen RMB 60/mt ($8/mt) week on week to RMB 4,177/mt ($541/mt), while that of Q235B grade 2.75 mm x 1,250 mm x C was up RMB 47/mt ($6/mt) to RMB 4,407/mt ($571/mt).
Meanwhile, the average price of ST12 grade 1.0 mm x 1,250 mm x 2,500 mm cold rolled sheet has risen RMB 16/mt ($2/mt) to RMB 5,003/mt ($648/mt), while that of ST12 grade 1.0 mm x 1,250 mm x C cold rolled coil was up RMB 17/mt ($2/mt) to RMB 4,987/mt ($646/mt).
As regards hot rolled, pressed by the official announcement on April 10 concerning the export rebate; mills and traders tried to export as many flat goods as possible before the deadline date of April 15. However, due to the tight availability of ships, they were obliged to transport their products to various bonded areas at the ports (where as regards the imposition of duties, their goods would be considered as already exported).
In this situation, the supply to the market saw a remarkable decrease, with a sharp drop being observed in inventory levels. In addition, Shagang began overhauling work on all its production lines, resulting in a drop in supplies to the Shanghai, Hangzhou, and Nanjing markets.
Nevertheless, some traders reflected that trading activity levels remained at a relatively high level over the past two weeks, and that consequently the market atmosphere seems strong and confident concerning the future.
In the wake of the export rebate cancellation for flat products, export quotations for China's hot rolled products moved up significantly. At present, the export price of SS400 HR thick coils from large-scale mills is at $570-580/mt FOB, while traders' quotations are at $560-570/mt FOB. However, buyers in Southeast Asia are not active in making purchases, because the export quotation of 2.0 mm SPHC from Taiwan's China Steel is only at $555-560/mt FOB. If exports for May fall off, then the domestic market can be expected to face great pressure.
With regard to the cold rolled market, due to the poorer quality of China's CR products compared to its HR, Chinese CR does not receive such a great welcome in the foreign markets. Therefore, the new rebate policy has not impacted much on China's cold rolled market.
The past week saw the cold rolled market maintain its overall stability, with both prices and trading activity continuing along previous trends.
Naturally, the strong performance in the hot rolled market also brought confidence to CR traders. Although some regions climbed up by a certain margin, it is still hard to say whether the slight upward trend can continue or be sustained in the future.
All in all, the new export policy has resulted in decreased domestic supply and in rising demand, and so China's flat rolled market can be expected to go up with possible fluctuations.