Chinese HR and CR markets awaiting the new policies

SteelOrbis Shanghai Chinese traders focused on selling their products in hand instead of stockpiling new products to make cash before the awaited policy announcements. Consequently the increase in supply brought equilibrium to market supply and demand, keeping prices unchanged from the previous week. Chinese government is expected to announce new macro-economic measures on industries such as ferroalloy, cement and steel. Furthermore, the central bank increased the loan interest rate last week, which is not good news for the steel industry. The new measures will lead to an increase in the cost of steel. Therefore, traders are trying to sell off their inventories as much as possible before the announcement of the policies. Consequently, for example in Shanghai, hot rolled product inventory decreased to 440,000 metric tons on April 28. Chinese hot and cold rolled sheet and coil export condition is still stable on the whole. Export offers for hot rolled products are at around $480-500/mt FOB. The export tax rebate policy and the macro-economic measures to be taken by the government are paid close attention among the market players. This is an important factor that affects the price trend, especially in the long-term. The upcoming policy announcements are expected to have a strong impact on hot and cold rolled product prices. New measures to be brought on ferroalloy industry will lead to an increase in the cost of steel while the export tax rebate decrease expected on finished steel products may lead to a decline in Chinese exports and increase the supply in domestic markets. The prices are expected to increase in the week following the holiday because consumers may try to replenish their stocks which reduce during the holiday.