During the past week (October 21-28), the cold rolled market in China has maintained its uptrend of the previous week. However, as regards the market in the coming period, insiders are still somewhat confused as regards the likely trend of prices. Considering that the uptrend in prices could generally activate market demand and accelerate the destocking process, most traders are inclined to raise their prices.
Product name | Specification | Category | Average price (RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
1.0 mm x 1,250 x C | SPCC | 4,760 | +103 | 698 | |
CRS | 1.0 mm x 1,250 x 2,500 | SPCC | 4,900 | +87 | 718 |
Propelled by the strong performance in the futures market and in the stock market, the recovery of hot rolled prices, as well as recent positive macroeconomic data, ready stock prices in the local cold rolled market have shown upticks during the past week. However, actual demand in the market still lacks vigor. Meanwhile, the current uptrend has been triggered mainly by the futures market and not by demand, and so the upward movement is not expected to last for long.
According to the relevant data, during the past week Chinese hot rolled inventory has shown increases in some regions and also decreases in others, while cold rolled inventory in the main markets has slipped, marking the first decrease in the last two months, with the biggest decrease seen in the eastern region. Currently, cold rolled inventory in the main Chinese markets stands at 1,189,790 mt, registering a decrease of 23,940 mt compared with the previous month, and marking an increase of 146,350 mt year on year. Accordingly, the inventory level is 14 percent higher than at the same time last year, which signifies that significant inventory pressure still exists in the market. As of October 23, cold rolled inventory in Shanghai market stood at 364,190 mt, 2,940 mt less than the previous week.
According to the new figures issued by China's National Bureau of Statistics on October 22, in September the country's raw steel output was 50.71 million mt, up 28.7 percent from last year, constituting the second-highest monthly figure since the beginning of the year. In the meantime, average daily output in September was 1.69 million mt, which is a new historic high.
To sum up, most traders are currently confused about the prospects for the future market. The recent rebounds following the long-standing decrease trend have certainly cheered up the traders; however, the general consensus is that it will be difficult to digest the high stock levels within a short period of time. Regarding next week's market, it is expected that the room for upward price movement will be limited, unless an improvement is seen in actual demand.