Mills’ price announcements bring equilibrium to CR market

SteelOrbis Shanghai Chinese CR sheet/coil prices, which saw dramatic increases at the beginning of last week, remained stable later after steelmakers’ new price list announcements. Traders are not worried about the bearish transaction volume because the market inventory is low due to the short supply of cold rolled products. Cold rolled product inventory in Shanghai was 350,000 metric tons on February 17, down 10,000 metric tons from February 10. The newly arrived product volume was also limited in the Lecong market. Many leading traders were deprived of cold rolled sheets produced by leading mills such as Angang and Benxi Steel. The price difference among different regions has also narrowed after the holiday, which normally used to be wider because of the difference in freight from north to south. Compared to the previous week, by the end of trading on Friday, February 17, the average price of 1.0 mm x 1,250 x 2500 ST12 in Tianjin, Shanghai and Lecong was up RMB 166/mt ($21) at RMB 4,633/mt ($576), 1.0 mm x 1,250 x C ST12 price was up RMB 193/mt ($24) to RMB 4,510/mt ($560), while imported 0.6 mm x 1,250 x C 08YU price was up RMB 166/mt ($21) at RMB 4,683/mt ($582). According to Angang’s March price list released on February 17, the increase range of CR products was RMB 50/mt ($6) excluding taxes, higher than the market expectations. Furthermore, Baosteel will also release its second quarter price list soon. According to the adjustment tendency in leading steelmakers’ ex-factory prices, Baosteel’s new prices will also see increases. The quantity of imported goods lessened because domestic traders are cautious in importing goods due the increase in CR offer prices in international markets. Therefore, the high priced portion of the imported products will not influence the market in the short term. Currently high prices, bearish demand from end users and the decline in hot rolled product prices move traders toward “wait-and-see” attitudes. Changes in the short-term market inventory and the transaction volume will be the key factors that will influence the price trend. For the long run, CR prices are likely to go up, but the increase range and speed will be limited.