Chinese section steel market continues to slide down

During the week ending May 18, the Chinese domestic section steel market continued to trend downward with no improvement seen in end-user demand. As of May 18, average market prices of section products in the main Chinese cities are as follows:

In the Shanghai market, the price of 50 mm x 50 mm x 5 m angle is at RMB 4,250/mt ($623/mt). The same product is sold at RMB 3,960/mt ($581/mt) in the Tangshan market, while it is sold at RMB 4,220/mt ($619/mt) in the Guangzhou market. Meanwhile, prices of 160 mm x 65 mm x 8.5 m channel stand at RMB 4,250/mt ($623/mt) in the Shanghai market, at RMB 3,980/mt ($584/mt) in Tangshan and at RMB 4,370/mt ($641/mt) in the Guangzhou market. In the Shanghai, Tangshan and Guangzhou markets, 250 mm x 118 mm x 10 m I-beam prices stand respectively at RMB 4,330/mt ($635/mt), RMB 4,300/mt ($630/mt) and RMB 4,320/mt ($633/mt). The prices are all ex-mill, including 17 percent VAT.

Currently, common carbon billets of 150 mm x 150 mm size are priced in the range of RMB 3,700-3,780/mt ($543-554/mt), the prices of common carbon billets of 165 mm x 165 mm size are at RMB 3,810/mt ($559/mt) and low alloy billet prices are at RMB 3,900/mt ($571/mt). The prices have indicated big decreases in the week in question, followed by the domestic section market.

The Chinese central government has recently announced a tightening of controls on the real estate market, under the influence of which the Chinese domestic construction steel market has indicated weaknesses in both prices and sales. Some private sector section producers have started to carry out overhauls on equipment, while focusing on destocking current inventories. As a result, demand from mills for billets is likely to decline in the coming period.

In the short term, the current softening trend is expected to continue in China's domestic section steel market.