Chinese semi finished steel market shows stable trend

SteelOrbis Shanghai Driven by the rising trading volume, Chinese billet prices are now stable after having touched bottom over the past week. Indeed, some regions have seen a slight rebound. Meanwhile, slab prices have continued on their steady trend. On November 22, the price of common carbon billet in Tangshan, Hebei Province was at RMB 2,740/mt ($347), while that of 20MnSi was at RMB 2,820/mt ($359) - both up RMB 20/mt ($3) compared with the previous week. The ex-factory price of slab from Laiwu Steel was at RMB 2,900/mt ($369), equal to the level of the previous week. The recent expansion in steel exports has resulted in an insufficient supply of long products to the domestic market. Therefore, rebar prices saw a relatively big rebound while prices of wire rod and section steel showed strong movement. Based on the current price level of semi finished steel, rolling mills can make a good profit. Thus, with bulky demand for semi finished steel and brisk commercial activity, prices have halted their downward trend and started to show stable movement. Meanwhile, mills in South East Asia began to renew their purchases in the Chinese market, gradually accepting the quotation of $420/mt CFR from China ( in comparison with that of $430/mt from CIS countries). However, their purchases are in small quantities and so the trading volume is not very big. Mills in South Korea are still standing aside, adopting a wait-and-see stance. They are reluctant to accept the $410-420/mt CFR quotation and hope that it will drop down as far as $390/mt CFR. At present, these mills are able to maintain their production relying on stock built up previously. Nevertheless, they are likely to resume purchases in December. As regards slab, the market continued in its stable trend. Due to the big price gap between China and the CIS, semis from the former still look attractive to mills in South East Asia. After the Chinese central government's announcement of the new export tariff policy, Chinese mills transferred the additional costs to their customers. Right now, general quotations are at $430-440/mt CFR. Although customers are showing acceptance of these prices, the trading volume has shrunk a little compared with the previous level. Overall, the Chinese semis market has shown stable movement with a balanced supply and demand relationship. With regard to finished steel, the market is in a downward trend, but it is unlikely to see any sharp drop due to low inventory. It is expected that Chinese semis prices will continue steady at their present levels.