Weak pricing trend continues in Chinese steel section market

As prices continue to dip further in China's domestic steel section market, in the week ending March 8 buyers have become increasingly unwilling to make purchases. The low number of housing starts has also negatively impacted the market transaction volume. Under such circumstances, traders have been obliged to sell off their inventories at negotiated prices in order to relieve the pressure they are under from shortage of funds. As of March 8, sale prices of steel sections in the Chinese domestic market are as follows:

In the Shanghai market, the price of 50 mm x 50 mm x 5 m steel angles is now at RMB 4,810/mt ($733/mt). The same product is sold at RMB 4,370/mt ($666/mt) in the Tangshan market and at RMB 4,720/mt ($720/mt) in the Guangzhou market. Meanwhile, prices of 160 mm x 65 mm x 8.5 mm steel channels stand at RMB 4,830/mt ($736/mt) in the Shanghai market, at RMB 4,450/mt ($678/mt) in Tangshan and at RMB 4,900/mt ($747/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 4,850/mt ($739/mt), RMB 4,650/mt ($709/mt) and RMB 4,780/mt ($729/mt). The prices are all ex-mill, including 17 percent VAT.

In the Tangshan market, billet prices have dropped on average by RMB 120-140/mt ($18-21/mt) in the past week. At present, the price of common carbon billets of 150 mm x 150 mm size has declined to RMB 4,130/mt ($629/mt), while 165 mm x 225 mm billets are now priced at RMB 4,160/mt ($634/mt), including 17 percent VAT. The decreases of production costs have forced domestic traders to reduce their sales prices for steel sections. Nevertheless, most buyers are just purchasing in line with demand or have even delayed their purchases.

In the eastern region of China, steel section prices have followed a weak trend with poor levels of market activity. In the southern region, steel section producers have mostly varied their prices depending on orders received. Focusing on north China, buyers are still anticipating further decreases, although the steel mills report very low profit margins. For the coming week, it is expected that Chinese steel section prices will probably trend sideways or slightly downward.