Chinese domestic prices start seeing sharp declines

SteelOrbis Shanghai After the government's decision to increase deposit reserve rate of banks, many commercial banks in China began to take back some parts of the loans they gave to local traders, leading to a decline in the market prices. Traders have fallen in an immediate need for cash, and began lowering their prices to sell more products. In Tianjin market, traders have reduced their prices continuously throughout the day as they failed to draw sufficient interest to their products at the current price levels. Meanwhile in Shanghai, traders had increased their 5.5 mm hot rolled coil prices up to RMB 4,500/mt ($563) in the morning with the expectation that Baosteel would increase its HR prices. However, Baosteel only increased its color coated product and full hard product prices. Therefore, traders lowered their prices down to RMB 4,300/mt ($538). It is thought that domestic steel prices in China will fall further in the short term, despite the strong export market.