Chinese section steel market rises strongly but activity remains weak

During the week ending July 27, section steel prices in the Chinese domestic market moved up significantly. As of July 27, the average section steel prices in the main Chinese cities are as follows:

In the Shanghai market, the price of 50 mm x 50 mm x 5 m steel angles is now at RMB 4,000/mt ($590/mt). The same product is sold at RMB 4,050/mt ($597/mt) in the Tangshan market and at RMB 4,050/mt ($597/mt) in the Guangzhou market. Meanwhile, prices of 160 mm x 65 mm x 8.5 m steel channels stand at RMB 4,000/mt ($590/mt) in the Shanghai market, at RMB 4,060/mt ($599/mt) in Tangshan and at RMB 4,180/mt ($617/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 4,050/mt ($597/mt), RMB 4,120/mt ($608/mt) and RMB 4,100/mt ($605/mt). The prices are all ex-mill, including 17 percent VAT.

During the early days of the last week, local sales prices of section steels climbed up rapidly, while billet prices also indicated considerable increases. At present, in the Tangshan market, common carbon billets of 150 mm x 150 mm size are priced at RMB 3,690/mt ($544/mt), while prices of low alloy billets are at RMB 3,810/mt ($563/mt). Both prices include 17 percent VAT. Despite the strong performance in sales prices, transaction activity is still slow in the domestic section steel market.

With inventories being melted down recently, and also taking into account the overhaul projects being carried out by many rolling mills, mills are not suffering from inventory pressure at the current time.

Looking forward, the Chinese section steel market is expected to follow a stable trend in the near term, though its development will partly depend on the trend of the domestic steel futures market.

US$1 = RMB 6.77