Chinese CR prices continue upward trend

Tuesday, 26 December 2006 11:06:17 (GMT+3)   |  
       

SteelOrbis Shanghai The demand continued to remain brisk while supplies from the mills to the domestic market decreased. China's cold rolled sheet prices remained on an upward trend and the hot rolled sheet market maintained a stable movement, coupled with a simultaneous decline of market inventories. On December 25, the average price quotation of SS400 grade 5.75 mm x 1,500 mm x C hot rolled coil in Tianjin, Shanghai and Lecong was up RMB 37/mt ($5/mt) week on week to RMB 3,760/mt ($481/mt), while that of Q235B grade 2.75 mm x 1,250 mm x C was up RMB 10/mt ($1/mt) to RMB 3,927/mt ($502/mt). Meanwhile, the average price of ST12 grade 1.0 mm x 1,250 mm x 2,500 mm cold rolled sheet was up RMB 76/mt ($10/mt) to RMB 4,893/mt ($626/mt), while that of 1.0 mm x 1,250 mm x C ST12 was up RMB 50/mt ($6/mt) to RMB 4,823/mt ($617/mt). The Chinese hot rolled market remained stable last week, with a slight increase in northern and eastern China. As regards the situation of the various regional markets, while the trading performance remained at a normal level, the mills reduced their supplies, resulting in decreased inventory. It is reported that some leading mills have boosted their production of high value-added products in order to make greater profits. For instance, Anshan Steel now mainly produces low-alloy and high-strength varieties; Maanshan Steel contınues its production of cold rolled products; Lianyuan Steel and Zhujiang Steel are making efforts to enhance their container sheet production; finally, Shagang has reduced its supply for domestic orders because of the good exports situation. With regards to the cold rolled market, a strong upward trend continued in eastern China last week. The growing demand in the downstream side and insufficient market supply both helped to boost up the prices, thus laying a solid foundation for the round of CR price increases. Coming up to the end of December, several mills released ex-factory prices for January 2007. The general ex-factory price situation is basically the same as the overall market trend. The prices of hot rolled coils remained at the levels of December, with a slight rise by some small mills; prices of cold rolled coils saw some increase to a certain extent. Generally speaking, the Chinese flat rolled market is in a good state these days. With the declining market inventory, mills and distributors have gradually recovered their confidence. Moreover, the agreement reached by Baosteel and CVRD regarding the iron ore price increase over the last weekend has also contributed to the market expectation of a price increase. Nevertheless, demand always goes down in January and February, so if the production climbs too fast in that period, this will create big pressure on prices in the market.

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