Massive increase for Chinese flat rolled products continue

SteelOrbis Shanghai With the high export quotations of domestic steel mills last week, domestic supply continued to decrease. The frequent ex-factory price hikes of steel mills led CR and HR markets continue the upward trend of the previous week and the prices saw continuous increases. After the new round of price hike driven by Baosteel's new prices in May, the leading steel mills continued to hike the flat rolled ex-factory prices. Some steel mills even renewed their prices continuously with 2-3 days interval. At present, hot rolled coil ex-factory prices of domestic steel mills are generally above RMB 4,300/mt ($537) for 5.5 mm thickness, that of CRC is at RMB 5,200/mt ($649) for 1.0 mm thickness. Under such a tight domestic supply, traders are convinced to hike the prices. According to the statistics, on June 2, the inventory of major HRC stocks in Shanghai is at 370,000 mt, below 400,000 mt, which resulting in the mutual increase of market prices and ex-factory prices. The increase range of Shanghai HRC market for the 3 consecutive days is RMB 100/mt ($12). The strong export situation is also a forceful support to the domestic prices. The HRC export quotation of some major domestic steel mills has reached $575-580/mt FOB, exceeding the export quotation of Japan. Meanwhile, the HRC prices of several large Indian steel mills are also rising, with the strong performance in American and European markets, which gives a great deal of confidence to the domestic market. Under the current domestic and international background, traders are confident of the future market, and believe that there is still an increase range for the prices. However, because of the rapid price increase recently, traders are willing to make more profit, resulting in the possibilities of going stable or even down in short term. Above all, the strong international market and tight domestic supply provide a support to domestic flat rolled prices. And the flat commercial activities and the willing of making profit in short term may cause the prices to fluctuate slightly.