Chinese CRC market rises amid short supply

During the week ending August 3, prices in the Chinese cold rolled coil (CRC) market have risen slightly, with not many transactions in the market. Due to the tight supply of CRC products, traders are still confident on the prospects for the market in the future. As of August 3, the average cold rolled coil prices in the main markets in China are as follows:

As of August 3, the prices of ST12 1.0 mm x 1,250 mm x C cold rolled coil in the Shanghai, Tianjin and Lecong markets are respectively at RMB 5,350/mt ($831/mt), RMB 5,390/mt ($837/mt) and RMB 5,540/mt ($860/mt). Meanwhile, the sales prices of ST12 1.0 mm x 1,250 mm x 2,500 mm cold rolled coil in these markets are respectively at RMB 5,430/mt ($843/mt), RMB 5,500/mt ($854/mt) and RMB 5,600/mt ($870/mt). All the prices above include 17 percent VAT. ($1 = RMB 6.44)

Previously, the domestic CRC market in China had been characterized by destocking activity, given the higher level of prices from mills as compared to market prices. In this context, traders were not active in concluding new orders from mills during April to June. As a result, the market is now facing a supply shortage problem, while traders are also reporting a lack of some specifications. This is cited as the main reason for the current rebound in CRC prices in China.

Lately, raw material prices have been slightly trending up in the Chinese market. At the same time, all kinds of costs such as labor costs, transportation charges, etc., have also risen. In addition, the mainstream steel producers in China have raised their ex-mill prices slightly in August and this has contributed to boosting market confidence. In June, Chinese CRC production reached 4.92 million mt, up 15.9 percent year on year. However, as end-user demand has not yet been released, it is hard to achieve a balance between supply and demand.

On the whole, the Chinese CRC market is expected to maintain a steady uptrend in the coming week.