Over the past week (Apr 29-May 6, 2009), the Chinese domestic cold rolled market has shown some positive signs, with prices trending up slightly and inventory dropping down steadily. Many traders expect that prices will maintain their climbing trend in the coming period, though they are still inclined to err on the side of caution in their activities.
Product name | Specification | Category | Average price(RMB/mt) | Weekly change (RMB/mt) | Price ($/mt) |
1.0 mm x 1,250 x C | SPCC | 4,060 | +53 | 595 | |
CRS | 1.0 mm x 1,250 x 2,500 | SPCC | 4,150 | +33 | 609 |
The increasing price trend seen in China's domestic hot rolled market has somewhat relieved the prolonged nervousness of local cold rolled market players. Additionally, May is regarded by most traders as a traditional booming season. These two factors have combined to push up cold rolled prices during the past week. With inventories melting gradually, supply shortages of certain sizes have been observed in the domestic cold rolled market, leading to a certain amount of confusion in market offers.
According to the relevant statistics, cold rolled inventory in Shanghai amounted to 320,000 mt during the week in question, decreasing by 9,000mt week on week.
In addition, Baosteel recently issued new prices for June. Accordingly, the producer's cold rolled prices have remained flat compared to May levels, with the price of DC01 1.0 mm x 1,250 mm x C CRC now at RMB 3,826/mt ($561/mt) ex-mill. Meanwhile, the official CRC price offered by Lianyuan Steel has been reduced by RMB 120/mt, with the 1.0 mm CRC ex-factory price now at RMB 4,080/mt ($598/mt). Furthermore, 1.0 mm CRC produced by Hebei Steel Group are now officially priced at RMB 4,000/mt ($587/mt).
Another local steelmaker WISCO (Wuhan Iron and Steel Co., Ltd) may provide some discounts for traders who have consistently been placing bookings with the company in the March-May period. As a result, traders who have not reached a certain booking tonnage during this period will not be able to fully avail of the preferential price policy. This has, however, resulted in a shortfall in WISCO's order books for April and May.
Chinese customs data show that in March China exported a total of 317,000 mt of cold rolled coils and imported 38,000mt of the same product. In addition, during the month in question, 2.957million mt of CRC products were supplied to the Chinese domestic market, down 5.4 percent year on year.
As the effects of the crisis lessen, demand from downstream industries is expected to show a gradual recovery. According to the China Automobile Association, in March the sales volume of passenger cars was 24,900 units, up 50.11 percent from the previous month. Meanwhile, National Bureau of Statistics data show that during the month in question China produced a total of 54,100 metal-cutting machines, up 27.7 percent compared with February's 40,800.
In conclusion, the Chinese cold rolled market is expected to climb up further in the coming period.