Chinese flat rolled prices continue to slide

SteelOrbis Shanghai Over the past week the Chinese flat rolled market decreased continuously, resulting in a large cumulative drop. Inventory is still at a relatively high level due to sluggish consumption. The views of market players vary as far as the future market situation is concerned. On March 19, the average price quotation of 5.75 mm x 1,500 mm x C SS400 hot rolled coils in Tianjin, Shanghai and Lecong has decreased RMB 123/mt ($16/mt) to RMB 3,950/mt ($511/mt), while that of 2.75 mm x 1,250 mm x C Q235B was down RMB 80/mt ($10/mt) to RMB 4,270/mt ($552/mt). Meanwhile, the average price of 1.0 mm x 1,250 mm x 2,500 mm ST12 cold rolled sheet has declined RMB 43/mt ($6/mt) to RMB 5,050/mt ($653/mt), while that of 1.0 mm x 1,250 mm x C ST12 cold rolled coil was down RMB 47/mt ($6/mt) to RMB 5,030/mt ($651/mt). As regards hot rolled, the Chinese market saw an overall slump during the past week. The price decline of the previous week did not stimulate downstream demand. Moreover, end-users even reduced their purchases last week, leading to sluggish commercial activity. However, when the price of SS400 4.5-11.5 mm x 1,500 mm x C in the Shanghai market decreased to RMB 3,900/mt ($505/mt) and that in Lecong dropped to RMB 4,000/mt ($517/mt), different opinions emerged concerning the future market situation. Generally speaking, it is possible the market may see a rebound, but without strong inventory consumption the rebound range is likely to be temporary and limited. Furthermore, after the Spring Festival, the mills' export quotations for hot rolled thick coils have continued at levels of around $530-540/mt FOB. However, with the declining domestic prices, some traders began to lower their quotations. For example, a Magang distributor gave out an export quotation of $520/mt FOB for SS400 4.5-11.5 mm x 1,800-2,000 mm x C shipped in April. With regard to the Chinese cold rolled market, prices moved down slightly over the past week. The bearish trading performance and increasing capital pressure forced traders to make certain adjustments to their price lists. However, the market still showed a flat reaction. All in all, the market faces great pressure in the short run. According to the newly-released industry statistics, for the January-February period China's HR output reached 13.01 million mt, up 38.8 percent year on year; CR output reached 4.89 million mt, up 58.7 percent. The rapid release of production capacity is a source of real concern to market players.