Mills' price hikes support flats market

SteelOrbis Shanghai Chinese steel makers hiked their flat product prices one after the other last week, yet the markets were away from indicating an upturn in purchases. Chinese flat product export prices are also climbing thanks to higher CIS origin billet prices. Benxi Steel increased its hot and cold rolled prices by RMB 430/mt ($54) and RMB 410/mt ($51) respectively on March 20. Later Baosteel increased its prices on March 23. Other steelmakers' price hikes were mainly due to Baosteel's increase. However, the market activities still remained bearish. Some traders' deliberate slight price hikes failed to draw the buyers' interest. Therefore, traders higher prices generally failed to see a large demand. Steel mills' April supply is still limited. The hot rolled product inventory in Shanghai dropped slightly; mainly attributed to the decrease in supply. Steel mills are expected to continue adjusting their prices in March-end and early April, which will direct traders to lift their prices further. On the exports side, Chinese mills increased their prices as the Russian and Ukrainian mills increased their semi-finished product prices which led to an increase in hot and cold rolled export offer prices from Southeast Asian markets. Throughout last week, Chinese offers for hot rolled coil shipments to S. Korea and India increased $20-30/mt to $480/mt CFR. The products that will be shipped to S. Korea will be produced in late May and early June. For traders, late March is the season for placing orders; therefore they are facing great capital pressures nowadays. If the transaction volume does not get better next week, some traders may lower their selling prices to mitigate the capital pressure. If traders manage to overcome their capital problems, the confidence in the market for April will increase obviously. The last week of March is a cornerstone in determining the situation of hot and cold rolled market. On one hand, further price adjustments by steel mills may push up the market prices; on the other hand, the bearish business activity may lead to a downward price trend. Market prices are expected to remain as are this week and they may start climbing next week. Ex-factory price increases by more mills will certainly prevent an obvious decline in market prices.