Chinese section steel market rises on back of government policy measures

Just like other domestic steel markets, during the week ending September 7 the Chinese section steel market has been strongly influenced by the central government's policy for energy savings and emission reductions. In this context, section steel supplies have tightened, especially in the provinces of Hebei and Shanxi. As a result, section prices have unexpectedly registered a strong uptrend. As of September 7, the average section steel prices in the main Chinese regions are as follows:

In the Shanghai market, the price of 50 mm x 50 mm x 5 m steel angles is now at RMB 4,400/mt ($650/mt). The same product is sold at RMB 4,500/mt ($665/mt) in the Tangshan market and at RMB 4,600/mt ($679/mt) in the Guangzhou market. Meanwhile, prices of 160 mm x 65 mm x 8.5 m steel channels stand at RMB 4,380/mt ($647/mt) in the Shanghai market, at RMB 4,500/mt ($665/mt) in Tangshan and at RMB 4,700/mt ($694/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 4,400/mt ($650/mt), RMB 4,700/mt ($694/mt) and RMB 4,600/mt ($679/mt). The prices are all ex-mill, including 17 percent VAT.

During the week in question, billet prices have climbed up by RMB 250/mt ($37/mt) week on week in the Tangshan market, followed by a large uptick of RMB 300/mt ($44/mt) in local section steel prices.

The power rationing policy implemented by local governments in the various regions is expected to result in a large decrease of steel output in China.

Nevertheless, the strong uptrend in prices has not yet stimulated any great interest from end-users. On the back of short supplies and higher raw material costs, it is expected that the current uptrend will continue in the short term.