Steel price continue increasing in Chinese domestic market- 06 Apr 10

It is reported that in Chinese domestic steel market the prices increase continues. Market quotations for main kinds of rolled steel grew in March by about USD 60 per tonne to USD 80 per tonne.

By the end of March the price of HRB335 rebar in eastern provinces reached averagely CNY 4300 per tonne from the stock; the price for HRC of average thickness exceeded CNY 4350 per tonne which is more than it was during the previous increase in June 2009.

According to local specialists the increase will not stop at this level. Baosteel having reviewed its decision regarding the equity of HR steel prices in April and March, showed the example for all participants of the market. In last week of March many other manufacturers also announced similar increase of the quotations. The demand for steel products in China is rather high, but not extraordinary. Spring has brought Chinese construction sector back to life. Automotive industry and some other sectors focused on the domestic market are also activating, whereas the export of Chinese products is much lower than it was before the crisis.

Baosteel believes that steel products consumption in China this year will only slightly exceed the last year figures. Many other specialists agree with these estimations. Rolled steel stockpiles, doubled last year, are decreasing very slowly, thus the overproduction problem is still there. However, Chinese metallurgists admit that the prices increase is caused mostly by raw materials price growth. Iron ore raw materials price in spot market increased in recent two months by more than 25% and approached USD 160 per ton CIF for 63.5% Indian concentrate. Australian and Brazilian raw materials suppliers offer their material with the delivery in the Q2 at USD 125 per tonne to USD 135 per tonne CIF which is twice as high as the last year contract prices.

The price spiral is untwisting in Chinese market. Expensive raw materials are followed by steel and the prices increase in steel market, stimulating the output growth cause further raw materials price increase. But Chinese exporters say that the situation in raw materials market will improve in the H2 year, when national iron ore companies are able to increase the output. However, in the nearest several weeks iron ore price will obviously remain high.

The situation in Chinese steel market looks still. Some traders keep the products hoping for further growth. There is no rush demand and speculation. Iron ore and rolled steel prices are likely to keep increasing further and the stable situation looks rather possible than the fall.

Export quotations grow along with domestic quotations. In the end of March Chinese companies offered HRC at about USD 660 per tonne to USD 680 per tonne FOB and CRC at USD 770 per tonne to USD 780 per tonne FOB. Commercial plate was offered at USD 670 per tonne to USD 700 per tonne FOB. These prices are similar to the prices of other regional manufacturers. Thus, by all appearances, in the nearest future China will not stir up the troubles.

Apr 6, 2010 07:47
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