Chinese flat rolled market began to go down

SteelOrbis Shanghai One week after the holiday, China's flat rolled product market started to going down gradually, with sluggish commercial activity and increased inventory. On October 16, the average price quotation of 5.75 mm x 1,500 mm x C SS400 hot rolled coil in Tianjin, Shanghai and Lecong was up RMB 33/mt ($4) week on week to RMB 3,860/mt ($488), while that of 2.75 mm x 1,250 mm x C Q235B hot rolled coil was up RMB 3/mt to RMB 4,130/mt ($522). The average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 cold rolled coil is up RMB 20/mt ($3) to RMB 4,877/mt ($617), while that of 1.0 mm x 1,250 mm x C ST12 cold rolled coil is up RMB 10/mt ($1) to RMB 4,770/mt ($603). As regards hot rolled in the post-holiday period, influenced by the price hike of Shagang and other steel mills, market players were optimistic about the future and prices were on a continuous upward trend. However, at the end of week 41, traders in the Shanghai market thought they had already achieved enough profit margins; therefore, they began to round up their sales prices at a lower level. Moreover, the shrinking trading volume caused all the local markets to follow this downward trend. Across all the Chinese markets, hot rolled products saw a remarkable increase in inventory, leading to a great pressure on the market. As regards cold rolled, the market was characterized by stable movement. After the holiday, the market stepped up a little, but the gradually-increasing bearishness in commercial activity caused a slight rise in market inventory. Traditionally, Q4 is the hot season for steel consumption. Growth in production this year is not as rapid as in the previous year. However, increased macro-control measures by the Central Government have exerted a significant impact on the domestic demand. According to the figures released by the Central Bank for September, the amount of credit loans saw a sharp drop, resulting in tight capital flow on the downstream side. In addition, American flat rolled prices have declined lately. Whether or when this will affect the Chinese flat rolled market is still uncertain, but this news is certainly not good. Meanwhile, those CIS mills, which are the direct competitors of the Chinese flat rolled producers, also lowered their export quotations, creating potential pressure on Chinese exports. All in all, the Chinese flat rolled market continues to maintain its balance between supply and demand at present. However, it seems that there are some problems as regards demand in both the international and domestic markets, which may have a great impact on the future trend.