Chinese flat rolled market sees week of sluggish activity

SteelOrbis Shanghai Over the past week the Chinese flat rolled market has seen a sluggish performance, with declines observed in various regions. Market inventory saw a minor reduction. Meanwhile, market players are expressing uncertainty in the current market situation due to the lack of clarity over the export rebate issue. On March 12, the average price quotation of 5.75 mm x 1,500 mm x C SS400 grade hot rollded coil in Tianjin, Shanghai and Lecong has decreased RMB 80/mt ($10/mt) to RMB 4,073/mt ($526/mt), while that of 2.75 mm x 1,250 mm x C Q235B hot rolled coil was down RMB 27/mt ($3/mt) to RMB 4,350/mt ($562/mt). Meanwhile, the average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 cold rolled sheet has declined RMB 10/mt ($1/mt) to RMB 5,093/mt ($658/mt), while that of 1.0 mm x 1,250 mm x C ST12 cold rolled coil was up RMB 10/mt ($1/mt) to RMB 5,077/mt ($656/mt). Due to the increased market inventory levels in the post-festival period, the market situation seems quite complicated. Since the steel mills have continuously made upward adjustments to their ex-factory prices, the costs of HR coils shipped in March are at around RMB 4,150-4,200/mt ($536-543/mt) in the various markets, far from the normal market price level - meaning that traders are currently selling at a loss. However, the uncertainty over China's export rebate policy and the newly-operating production capacities due in the coming half-year have thrown the market into a difficult situation. Unwilling to lower the prices, traders do not dare to raise their prices either. However, generally speaking, the flat rolled market is gradually showing signs of improvement. Last week's market inventory data indicate that inventory has stopped its upward movement and has begun to see a slight decline. It is estimated that next week's consumption will reduce market inventory significantly. The market is then expected to see a turn around, with recovering levels of commercial activity and prices also on the up again.