Slight fluctuations for Chinese hot rolled coil prices
Chinese medium hot rolled coil prices began a slight upward trend late last week after experiencing a minor decline earlier in the week; prices of thin products and imported products declined by a small amount.
On Tuesday, November 8, HR coil prices were down across
Chinas three major markets. Some specifications of medium HR coil in these three markets were in short supply. Prices were stable for three days. On Friday, November 11, new batches of products arrived in the Shanghai and Tianjin markets, and traders increased their prices immediately. Therefore, prices in these three markets went up by different amounts upon opening on Monday, November 14.
By the close of
trading on Monday, November 14, the average price of 5.75mm*1500*C SS400 in the Tianjin, Shanghai and Lecong markets was RMB 2983/mt ($369/mt), up RMB 13/mt ($2/mt) compared to November 7; 2.75mm*1250*C Q235B/SPHC had fallen RMB 50/mt ($6/mt) to RMB 3267/mt ($404/mt); while imported 2.0mm*1250*C 08YU had fallen RMB 25/mt ($3/mt) to RMB 3425/mt ($424/mt), excluding the Tianjin market.
The direct factor that led to price increase later in the week was the short supply of medium HR products. Traders cut their purchasing volume due to the protracted price drop. Some specifications of medium HR coil had been in short supply since the beginning of November in the Shanghai, Tianjin and Lecong markets. Furthermore, new batches of products arrived in the market late, exacerbating the short supply. This in turn helped to stabilize mid-week prices. Under these circumstances, it was natural for those traders who were the first to receive new batches of products to increase their prices.
However, the current price increase can only be regarded as a slight fluctuation. The transaction volume did not go up during the price increase, yet some specifications that were in short supply saw a better sales figure. In the short term, new batches of products, in particular low price products, will arrive in the market one after the other. Consequently, the short supply will be alleviated.
Sources report that
Baosteel held a meeting with staff members during the previous week. In the meeting, they analyzed the current market conditions and challenges faced by
Baosteel. The attendees also put forward their marketing strategy for next stage, i.e. adopting a low-price sales policy to enhance
Baosteels market share and force outdated enterprises from the market. Rumors are that
Baosteel will announce its prices for the first quarter of 2006 next week. Hot rolled sheet/coil prices are expected to slide around RMB 700-800/mt ($87-99/mt). This will definitely impose pressure on market prices.
Thin products might in fact face greater price pressures. There are plenty of thin products in the market, especially of the imported variety. It was learnt that a new batch of imported products arrived in the Lecong market last week. The shipment reportedly contained 100000 metric tons of cold rolled sheet/coil. In addition, CR sheet/coil prices are still in a downward trend, which has some influence on thin products.
Traders worry about the short-term price trend as the transaction volume did not pick up during the price increase.
In summary, the arrival of new batches of products and changes in commercial activity will be important factors influencing the price trend in the short term. However, the price increase will not last long. The softened hot rolled sheet/coil market will not reverse itself.
SteelOrbis Shanghai