Chinese cold rolled market slides further, end-users wait and see

Over the past week the cold rolled market in China has been trending down further. End-users are mostly adopting a wait-and-see attitude in anticipation of further price drops; this constitutes the main reason for the current slackening of demand. At present, the mainstream market price of hot rolled coils has already decreased to around RMB 3,100/mt ($454/mt), which in turn has brought downward pressure to bear on the domestic cold rolled market.

Turning to the various regions, the market in Wuhan in the central Chinese province of Hubei has registered the biggest drop, down RMB 100/mt ($15/mt). Meanwhile, prices have declined RMB 30-50/mt ($4-7/mt) in the eastern and southern Chinese markets. According to the latest figures, cold rolled inventory stands at 327,500 mt in the Shanghai market this week, down 4,600 mt compared to last week. Looking at the current market atmosphere, following the price downtrend seen in the hot rolled market late last week, China's cold rolled market has been in wait-and-see mode, with an evident shrinkage observed in sales.

On April 1, Baosteel announced its cold rolled product prices for May. Accordingly, the producer cut its ex-mill price of DC09 1.0 mm CRC by RMB 200/mt ($29/mt) to RMB 3,826/mt ($560/mt). Meanwhile, Wuhan Iron and Steel company (WISCO) has kept its May production cold rolled product prices unchanged, and so its Q195 1.0 mm cold rolled plate price remains at RMB 3,960/mt ($580/mt) ex-factory, while its Q195 1.0 mm CRC price is still at RMB 3,910/mt ($572/mt) ex-factory. All the above prices exclude 17 percent VAT. It is said that Anshan Steel and Benxi Steel will follow suit and issue new price lists next week, with most traders predicting a further decrease in their new prices.

With regard to inventory levels, cold rolled inventory has generally been undergoing gradual digestion in recent times. However, with mills accelerating shipments to the domestic market in order to clear their stockpiles, the market will probably face pressure from increased supplies in the future.

All in all, China's domestic cold rolled market is expected to keep trending down for the coming week.

Finally, in the production and export estimates for April, Chinese domestic producers are predicted to produce a total of 2.004 million mt of cold rolled coils in April, by operating at 85.86 percent of their total production capacity. Of this total production figure, 16,000 mt are expected to be exported, with around 1.578 million mt expected to be sold in the domestic market, down 121,000 mt on last month. Accordingly, the expected production capacity utilization rate and the expected volume for domestic consumption in April indicate small decreases compared to the March figures.