Over the past week (July 15-22), cold rolled prices in the Chinese domestic market have continued their rising trend of the previous week but at a steeper rate. During the past week, 1.0 mm CRC prices in the main Chinese markets such as Shanghai, Tianjin and Lecong have without exception exceeded RMB 5,000/mt ($732/mt). At the same time, although the total cold rolled inventory in the main Chinese markets has increased slightly, inventory is currently not exerting any great pressure on the market.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
1.0 mm x 1,250 x C | SPCC | 5,067 | +217 | 742 | |
CRS | 1.0 mm x 1,250 x 2,500 | SPCC | 5,177 | +234 | 758 |
The recent price increases have been propelled by the uptrend recorded in the hot rolled market, capital availability and the increases seen in mills' prices. The main features of the current cold rolled market in China are as follows: traders are positive towards the future market, prices keep surging, prices differ considerably among traders, and sales activities are slack.
According to the census data, as of July 16 cold rolled inventory in the Shanghai market had risen by 1,490 mt over the previous week's level of 310,000 mt. Despite the increase in the inventory levels, distributors are still facing some shortages due to supply limitations from the mills. In addition, certain specifications are now in short supply.
On July 16, Liaoning Province-based Angang Steel announced an increase of RMB 500/mt ($73/mt) for its CRC; as a result, its 1.0 mm cold rolled sheet is now priced at RMB 4,520/mt ($653/mt).
On July 20, Benxi Steel based in the same region as Angang Steel also released its new price policy for August. Accordingly, the producer's CRC price has been raised by RMB 430/mt ($63/mt), with its DC01 1.0 mm x 1,250 x C cold rolled coil price now at RMB 4,460/mt ($653/mt) ex-mill.
All the above prices exclude 17 percent VAT.
With domestic prices trending up continuously, ex-China cold rolled coil offers have gradually lost their competitiveness. As some foreign traders report, recent export activity has been practically stagnant.
In general, with the surge observed in cold rolled prices over such a short period, sales activities have slowed down. It is expected that the cold rolled price may climb up further during the coming week. However, traders are expected to show greater caution.
According to the statistics from China's National Bureau of Statistics, in the first half year domestic production of pig iron, crude steel and finished steel amounted to 258.799 million mt, 266.5829 million mt and 316.4824 million mt respectively, up 5.6 percent, 1.2 percent and 5.7 percent year on year. The corresponding data for June were 48.9253 million mt, 49.3891 million mt and 62.1399 million mt. China's daily production of crude steel in June was 1.6463 million mt, compared to 1.5648 million mt in June last year.
Furthermore, the new policy on auto purchases promulgated by the Chinese government with effect from June 1, 2009 to May 31, 2010 has been seen as good news for the local cold rolled market. According to the policy, owners of old cars can avail of a special subsidy of RMB 3,000-6,000 when purchasing new cars.