CRC prices in China fluctuate in downward direction

After a continuous uptrend in the previous two weeks, cold rolled coil (CRC) market prices in China began to fall down in the week ending August 10. As of August 10, 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 5,350/mt ($831/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 5,450/mt ($846/mt) and RMB 5,600/mt ($870/mt). All the prices above include 17 percent VAT ($1 = RMB 6.44).

During the given period, CRC inventory in Chinese market increased slightly. As of August 5, total CRC inventory in the domestic market came to 1.63 million mt, up 13,810 mt from the previous week. In the Shanghai market, the inventory of CRC products on the same date stood at 568,190 mt, rising by 680 mt week on week.

After the destocking process, some specifications were in short supply in the past few weeks. This constituted the main reason for the previous uptrend. Nevertheless, there also exists some negative news. On the one hand, the Chinese consumer price index (CPI) has kept rising, while there is also an anticipation of an increase in interest rates, and steel enterprises are under financial pressure. On the other hand, with the previous digestion of market inventories, the market will probably see a new round of inventory replenishment.

The downgrading of the US' credit rating has caused a sharp slump in the global stock markets, including the Chinese stock markets and the Chinese steel futures market, thereby also contributing to the drop in domestic CRC prices in China.

It is expected that CRC prices in China will trend sideways to slightly down in the coming week.