Chinese semi finished steel prices in gradual decline

Thursday, 20 July 2006 10:11:33 (GMT+3)   |  
       

SteelOrbis Shanghai After experiencing the continuous sharp decline earlier, Chinese semi finished steel prices are now at a low level. With the market gradually smoothing down, the steel mills have given up selling billets with low prices and they are waiting to see the change in market trend. In Tangshan, Hebei province, billet prices decreased around RMB 20-50/mt ($3-6) week on week, while slab prices remained constant. In China, rolling mills are still passive in their billet purchases, while the semis producers can not afford to sell at a lower price due to the pressure of costs. Therefore, the quotations remained unchanged, only some discounts are provided if the purchase quantity is high and the payment term is short. Some mills are even limiting their production in order to curb the inventory pressure. Some changes have also occurred on the finished steel market side. With the rebar price basically touching the bottom, there is no big decrease range for the future and some markets are getting prepared for a rebound, which may support semi finished steel prices. On the other hand wire rod, large and medium section prices are still in a downward trend, which is difficult to end in short term, which is causing a great pressure on billet prices. Meanwhile, semi-finished and finished steel exports have also narrowed down. Although the slab price did not see a substantial change last week, the market players are still not optimistic about its future market. Some news has been reported from Vietnam that the billet makers in the country, which are currently producing below their capacities, would start producing more products soon. Furthermore, two new plants with totally 700,000 mt billet production capacity are expected to come on stream later in the year. Imports account for 70 percent of the total billet supply in Vietnam and most of the imports are from China. On the other hand, S. Korean steelmakers may be expected to increase their slab imports in order to produce more shipbuilding plates and automotive steel. All in all, billet market is not expected to turn better soon, but with certain support, the price is unlikely to decrease by a big margin in the future. Meanwhile, slab price is still in the downward trend. Slab prices are still far from the bottom; therefore further decrease may be expected.

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