China’s cold rolled market posts steady uptrend

Over the past week (May 26-June 3, 2009), cold rolled prices in the Chinese domestic market have shown a steady uptrend, with certain levels of sales activity seen in the market. Most traders are still positive as regards the prospects for the near future. Although large traders' do not have many materials in hand, the latest statistics indicate that current market inventory is on a rising trend.

In the Shanghai and Tianjin markets, differing prices are observed in traders' offers. Some traders have been giving lower offers in order to sell more inventories in a context of low demand, while others have continued to hold their prices stable, citing higher production costs as the main reason.

In the Lecong market, as there is a shortage of large size cold rolled materials, traders are tending to push up their offers. In comparison, the cold rolled market for smaller specifications has been facing greater pressure due to high inventory levels and the strong volume of import arrivals.

According to the relevant statistics, as of May 31 cold rolled inventory in the Shanghai market reached 290,000 mt, down 2,000 mt as compared to last week. The inventory in the Shanghai market has been on the way down over the past few weeks. However, as we look at the Chinese market as a whole, total inventory in the leading markets is on an uptrend.

It is heard that giant Chinese steelmaker Baosteel has planned to raise its ex-mill prices of cold rolled products for July, by an expected margin of RMB 200/mt ($29/mt).

In short, with the expectations that mills would push up their prices and the rumors of a possible export tax rebate adjustment for hot rolled products, market prices have in general been showing upward movement lately.

Nevertheless, as regards the downstream industries, with low-priced import arrivals and materials under May contracts pouring into the market, pressures still exist. The current period is the boom season for the steel market, and so a further increase is expected over the coming week. As for the future market, most traders are positive as regards the prospects for the market up to mid-June, but are not so sure about the market's later development.