Chinese CRC market still declines amid continuing poor demand

During the week ending October 26, cold rolled coil prices in the Chinese market have continued their downtrend. Demand in the market is slack and market sentiment remains poor. As of October 26, the average prices of cold rolled steel products in the main Chinese cities are as follows:

As of October 26, 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 5,280/mt ($833/mt), RMB 5,160/mt ($814/mt) and RMB 5,190/mt ($819/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 5,300/mt ($836/mt), RMB 5,150/mt ($812/mt) and RMB 5,350/mt ($844/mt). All the prices above include 17 percent VAT ($1 = RMB 6.34).

Given hope by the positive pricing movement seen in the domestic steel futures market, many traders were looking forward to the end of the downtrend of CRC prices, which had lasted for six consecutive weeks. Many of them had started to raise the spot prices of their products. However, the poor levels of actual market activity failed to provide support for the price increases in question and so overall market prices continued to decline in the past week.

According to market insiders, it is still difficult to foresee any change in the weak performance of the Chinese steel market in the short term, as the main factors including steel exports, demand and investment have not exerted any positive impact on the market. The hopes of an increase in prices observed in the past week were more the impact of positive news from the financial markets. Meanwhile, there no large-scale production suspension or overhauls scheduled by Chinese CRC producers.

In the absence of an improvement in market fundamentals, it is expected that the prices of CRC in China will continue to trend down in the coming week.