Capital pressures decrease HR prices

SteelOrbis Shanghai Driven by steelmakers' new price lists, market prices of hot rolled products were in an upward trend starting from the Chinese New Year. However, traders are facing capital pressures towards the end of February, therefore, it will be their main task to lower the inventory and get cash. The stagnant trading activities may reduce traders' prices further. At the beginning of the month, traders sold products at RMB 3,300/mt ($410) level, but failed to get a good sales figure. However, the profit margin was large because they purchased the products at RMB 2,950/mt. On the other hand, the market inventory started piling up and necessitated a decrease in market prices. Compared to the previous week, by the close of trading on February 20, Monday, the average price of 5.75 mm x 1,500 x C SS400 fell RMB 20/mt ($2) to RMB 3,217/mt ($400), 2.75 mm x 1,250 x C Q235B/SPHC price rose RMB 17/mt ($2) to RMB 3,450/mt ($425), while imported 2.0 mm x 1,250 x C 08YU price remained constant at RMB 3,625/mt ($450). Last week, the transaction volume picked up when prices fell to a certain level, while most deals were concluded among traders. Prices of major steelmakers such as Wuhan Steel still remained somewhat high, and the quantity of newly arrived products was small. In Shanghai, some traders purchased large tonnages in the market when 5.5 mm product prices regressed to RMB 3,150/mt ($391) level, as it was cheaper compared to steelmakers' prices. Prices remained stable after Angang's March price list announcement on February 17, prices in Tianjin market even saw a slight increase. Market players are now focused on Baosteel's upcoming price list for the second quarter. Baosteel's new prices are likely to go up. This can improve market players' confidence and bring equilibrium to the market prices. Meanwhile, steelmakers' export situation improved. Offers from China were acceptable as a result of the hike in offer prices from Russia and Ukraine. Domestic traders and steelmakers' offers kept climbing. Offers of Taiyuan Steel went up by $10/mt or so to $400-410/mt FOB.