In the past week the Chinese hot rolled market has continued to move down on a fluctuating trend. Angang, Benxi Steel, Shougang and some other leading domestic mills have successively announced downward adjustments ranging from RMB 450/mt ($66/mt) to RMB 550/mt ($81/mt) to their hot rolled prices for the month of October. Nevertheless, the market levels of hot rolled materials from the leading mills in question are still lower than those mills' ex-factory prices. Meanwhile, growing inventory levels are also exerting great pressure on the domestic market.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
HR | 5.75 mm x 1,500 mm | Q235B | 3,493 | -70 | 512 |
HR | 2.75 mm x 1,250 mm | Q235B | 3,643 | -57 | 534 |
Excessive market supply has remained the major problem facing China's hot rolled market, which is unlikely to rebound without effective consumption of market inventory and efficient control of production capacities. In the past week Angang, Shougang and Benxi Steel announced downward adjustments in their latest prices; however, given the obvious imbalance between supply and demand, the price reductions are far from being sufficient to stimulate market trading. With no improvement seen in the gloomy market atmosphere, traders have been struggling fiercely for the limited orders available from downstream industries, thus resulting in a continuous slip in mainstream market quotations.
On September 14, Angang cut its hot rolled prices by RMB 450/mt ($66/mt) compared to the levels for September. Thus, the producer's price of 5.5 mm x 1,500 mm Q235 is RMB 3,030/mt ($444/mt), while its price of 5.5 mm x 1,500 mm SPHC is RMB 3,080/mt ($452/mt). The prices exclude 17 percent VAT.
On September 16, Shougang lowered its hot rolled prices by RMB 550/mt ($81/mt), with the new offer price of 5.5 mm x 1,500 mm Q235 HRC now at RMB 3,660/mt ($537/mt). The price includes 17 percent VAT.
On September 17, Benxi Steel announced a reduction of RMB 360/mt ($53/mt) in its HR prices, with its 5.75 mm Q235 hot rolled coils now offered at RMB 3,721/mt ($545/mt). The price includes 17 percent VAT.
In the past week hot rolled inventory in China's leading markets has continued to rise. According to the latest figures, total hot rolled inventory in China's leading markets stood at 3.16101 million mt, up 1.5067 million mt year on year and up 74,950 mt month on month. Moreover, hot rolled inventory in Shanghai amounted to 968,900 mt on September 18, up 16,100 mt compared with the level on September 11. The market has been facing escalating pressure from inventory in recent days.
Looking at the current macro-economic situation, while China's economy has been boosted by strong investment in past months, it has recently been reported that the banks intend to tighten the credit supply in the coming days.
Overall, Chinese domestic hot rolled prices are expected to continue to fluctuate at low levels in the near future.