SteelOrbis Shanghai
Over the past week Chinese hot rolled prices fluctuated at a high level, showing a downward tendency on the whole. Meanwhile, the cold rolled market saw stable movement with a weak trend. In consideration of the expected increase in sales pressure on the mills in the period ahead, Baotou Steel has clearly stated its intention to reduce its ex-factory prices for June, while many other mills are said to have promised their traders certain levels of subsidies.
On May 21, the average price quotation of 5.75 mm x 1,500 mm x C SS400 in Tianjin, Shanghai and Lecong was down RMB 47/mt ($6) to RMB 4,133/mt ($540), while that of 2.75 mm x 1,250 mm x C Q235B remained constant at RMB 4,423/mt ($577).
Meanwhile, the average price of 1.0 mm *1250*2500 ST12 is at RMB 5,070/mt ($662), while that of 1.0 mm *1250*C ST12 is at RMB 5,033/mt ($657), both equal to the levels of the previous week.
As regards hot rolled, the various regional markets saw different degrees of decline in their trading volumes during the past week. Moreover, since the different market inventory levels gave rise to different market movements, overall confusion was seen in the Chinese hot rolled market. In addition, Tianjin, Shanghai, Lecong, and other leading markets all went steadily down to a certain extent.
With regard to cold rolled, although commercial activity declined compared with the previous week, prices in general still remained stable over the past week against the background of overall low market inventory.
All in all, the Chinese flat rolled market moved on a weak and downward trend during last week, indicating an obvious market downturn. Since the mills and traders have already concluded all their exports for late May or even June, they will certainly reduce their export levels and increase supply to the domestic market, resulting in great pressure on prices in the future.
Furthermore, the Chinese Government has announced a series of macroeconomic control measures in recent days, aiming at limiting excessive economic growth - a move which looks likely to curb steel demand significantly. On May 21, China's central government decided that as of June 1, 2007, a 5-10 percent tariff will be imposed on exports of some steel products in order to further control exports.
In conclusion, the Chinese flat rolled market will most likely face relatively strong pressure in the future, resulting in downward price movement accompanied by fluctuations.