SteelOrbis Shanghai
Since many mills have been overhauling their hot rolling lines in early September, supply shortages have been observed in the market. Under these circumstances, Chinese flat rolled prices soared sharply over the past week, accompanied by active levels of commercial activity and by a continuous decline in market inventory.
On September 10, the average price quotation of 5.75 mm x 1,500 mm x C SS400 in Tianjin, Shanghai and Lecong was up RMB 167/mt ($22/mt) week on week to RMB 4,440/mt ($589/mt), while that of 2.75 mm x 1,250 mm x C Q235B has risen RMB 143/mt ($19/mt) to RMB 4,510/mt ($598/mt).
Meanwhile, the average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 has increased RMB 133/mt ($18/mt) to RMB 5,160/mt ($686/mt), while the average price of 1.0 mm x 1,250 mm x C ST12 was up RMB 123/mt ($16/mt) to RMB 5,080/mt ($676/mt).
As regards hot rolled coils, the market continued its previous strong tendency. Throughout the past week, some traders stopped their sales on several occasions, while some leading traders even made purchases in the market to make up for their stocks, thus further boosting up the market prices. Against this background, end-users are worried about the future market situation and have begun to expand their purchases, thus leading to the brisk trading performance.
Many steel mills have scheduled overhauling work on their production lines for the current period. For example, Anshan Steel started overhauling its 1700 hot rolling production line in early September, affecting 50,000 mt of production; meanwhile, Tangshan Steel will carry out an overhauling of its 1810 hot rolling line on September 16, affecting the production of 100,000 mt of HRC. Laiwu Steel will begin overhauling work on September 23, affecting 80,000-100,000 mt of production.
It is because of the above-mentioned overhauling works that traders have dared to continuously raise up their prices, and there remains a relatively large space available for further upward movement in the future.
However, some hidden difficulties also exist in the current hot rolled market.
Firstly, after the rapid increase in the domestic market, traders have met with greater difficulty in their efforts to achieve exports. Therefore, exports are likely to be limited in October and November.
Secondly, the biggest price increase has been concentrated in common carbon thick coils in China, but the increase range in thin coils, SPHC, low alloy and even shipbuilding coils is quite limited. In some regions, low alloy prices are even lower than common carbon coils; moreover, the price gap between thin coils and thick coils is becoming increasingly narrower. All these phenomena are unusual, and may be regarded as hidden difficulties lying in the way of the further upward price movement of China's HRC.
With regard to cold rolled coils, the prices accelerated their upward pace over the past week. The climbing hot rolled market has not only activated the whole flat rolled market, but has also boosted up the production costs of cold rolled products. Meanwhile, the cold rolled market continued to see tight availability of supplies. In this context, traders preferred to hold on to their products and wait for a further price increase, thus aggravating the supply shortage situation to a large extent.
Above all, the market maintained an almost unchanged performance compared with the previous week, continuing its rising tendency. Furthermore, based on the data issued for steel exports in August, the considerable month on month decrease in China's finished steel exports for August, along with the decrease in semis exports in the same month (both year on year and month on month), has created a solid foundation for future price increases.