Last week China's domestic hot rolled market maintained its rising trend, while inventory levels in the various regions indicated a mixed performance. Most traders continue to be cautiously optimistic as regards the propects for the future.
Product name |
Specification |
Category |
Average price (RMB/mt) |
Weekly change (RMB/mt) |
Price ($/mt) |
HR |
5.75 mm x 1,500 mm |
Q235B |
3,687 |
+70 |
540 |
HR |
2.75 mm x 1,250 mm |
Q235B |
3,833 |
+56 |
561 |
As a result of the new round of price adjustments made by various leading mills in China, the cost prices of hot rolled materials for July have increased to the range of RMB 3,600-3,700/mt ($527-542/mt). The ascending costs of hot rolled products have contributed to the optimistic atmosphere among traders as regards the future market. However, the climbing ordering costs have also narrowed down the profit range for traders. Considering the current bearish demand on the downstream side and also the approach of the slack season for market demand, the upward movement of hot rolled prices is expected to face greater pressure in the future.
According to the latest statistics, hot rolled inventory in Shanghai amounted to 800,000 mt on June 19, down 18,000 mt week on week.
On June 19, Angang and Benxi Steel raised their HRC prices by RMB 150-300/mt ($22-44/mt) for July, boosting market confidence to a certain extent. Following the adjustment, Angang's 5.5 mm x 1,500 mm Q235 HRC is now offered at RMB 2,980/mt ($436/mt), while the new price of 5.5 mm x 1,500 mm SPHC is RMB 3,030/mt ($444/mt). Meanwhile, Benxi Steel's ex-factory price of 5.5 mm x 1,500 mm x C Q235 stands at RMB 3,240/mt ($474/mt), with 2.75-3.0 mm x 1,500 mm x C offered at RMB 3,310/mt ($485/mt). All the above prices exclude 17 percent VAT and are effective as of June 19, 2009.
As a result of the increased export rebate rate of nine percent for hot rolled coils, export quotations of Chinese HRC have seen a general reduction from the late May levels of $490-510/mt FOB to $460-470/mt FOB. Nevertheless, affected by Baosteel's hikes to its July HRC prices, some second tier mills again raised their HRC quotations; on the other hand, in order to guarantee a sufficient export volume, the first tier mills still kept their prices unchanged. As a result, the current mainstream export quotations of hot rolled coils from Chinese second tier mills are at $490-500/mt FOB, while HRC from first tier mills are offered at $460-470/mt FOB to the export market.
It is heard that so far in June some Chinese first tier mills have concluded substantial export deals, while most second tier mills and trading companies have only received limited orders during the same period.