Chinese CRC market fluctuates on a downtrend

During the past week the Chinese cold rolled coil (CRC) market has fluctuated on a downward trend, as in the previous week. Current market prices are as follows:

On October 27, prices of ST12 1.0 mm × 1,250 mm × C CRC stand at RMB 5,240/mt ($783/mt), RMB 5,200/mt ($777/mt) and RMB 5,300/mt ($792/mt) respectively in the Shanghai, Tianjin and Lecong markets. In addition, prices of ST12 1.0 mm × 1,250 mm × 2,500 mm CRS stand at RMB 5,270/mt ($788/mt), RMB 5,350/mt ($800/mt) and RMB 5,400/mt ($807/mt) respectively in the Shanghai, Tianjin and Lecong markets. All the above prices include 17 percent VAT (US$1 = RMB 6.69).

During the past week the Chinese central bank increased the benchmark interest rate, following which more buyers and end-users started to adopt a wait-and-see approach. As October draws to a close, some traders have started to sell at lower prices in order to bring in cash; however, market demand has not improved and inventory levels are on the high side. In this overall context, Chinese CRC market prices have indicated a decline.

On October 25, China's National Development and Reform Commission announced increases in gasoline and diesel prices effective as of October 26. The higher fuel costs are expected to increase cost pressure on the steel industry.

CRC inventory in the major markets in China has increased. On October 22, aggregate cold rolled coil inventory in the main Chinese cities was 1.41096 million mt, up 3,930 mt week on week. Southern China registered the strongest increase in CRC inventory. On October 22, CRC inventory in Shanghai was 482,060 mt, up 1,330 mt week on week.

Generally speaking, in China's CRC market, traders are willing to sell but market demand is not good, and so prices are tending to weaken. However, high costs in the future may help support CRC market prices. It is expected that the Chinese CRC market will fluctuate within narrow margins in the coming week.