Hot rolled price increase may support cold rolled prices

SteelOrbis Shanghai Steel mills published their price lists for September one after the other in the end of August, which brought certain positive impacts on the market. The market trends of hot rolled and cold rolled products continued to differ, due to their different supply and demand relationship. Hot rolled coil prices increased sharp last week, while cold rolled coil prices kept decreasing slowly. On September 4, the average price quotation of 5.75 mm x 1,500 mm SS400 hot rolled coil in Tianjin, Shanghai and Lecong increased RMB 120/mt ($15) week on week to RMB 3,710/mt ($467), and that of 2.75 mm x 1,250 mm Q235B increased RMB 43/mt ($5) to RMB 4,183/mt ($526). The average price of imported 2.0 mm x 1,250 mm 08YU decreased RMB 20/mt ($3) to RMB 4,200/mt ($528). The average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 cold rolled sheet decreased RMB 10/mt ($1) to RMB 4,703/mt ($592), and that of 1.0 mm x 1,250 mm ST12 cold rolled coil dropped RMB 17/mt ($2) to RMB 4,650/mt ($585). The average price of imported 0.6 mm x 1,250 mm 08YU retained RMB 5,050/mt ($635) level. On the hot rolled side, the price list announced by Baosteel in the previous week strengthened the confidence of other steel mills. Therefore, many other mills announced ex-factory prices for September last week, which were equal to the level of the market prices. In particular, the prices of Anshan New Steel, Benxi Steel, Wuhan Steel and other leading steel mills are even higher than the market levels. This time, traders also accepted the ex-factory price increases as the current supply and demand relation improved. Furthermore, the end-users also began to purchase hot rolled sheet and coil actively. The trade improved and the market prices increased. Hot rolled inventory saw a continuous decline through last week, due to better supply and demand relation. The market is gradually running out of low-cost supply; and the costs of subsequent supplies will be in an upward trend. Therefore, the market prices are expected to move up with fluctuations in the future. On the cold rolled side, influenced by the sluggish demand, cold rolled prices continued to decrease by a small margin through the last week. The market inventory grew slightly, while the supply and demand relation has gone worse. However, new ex-factory prices, and the rise in hot rolled product prices curbed cold rolled product price decline. The market atmosphere is turning better, and only a few people accepted to sell their products at the low price level. We are still in the dead season with regards to cold rolled product demand, and market trend is not expected to become remarkably better. Nevertheless, because of the strong hot rolled product market, cold rolled product prices are expected to stop falling next week.