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Baosteel price rises fail to boost HRC sentiment
Date:Dec. 12, 2013
Shanghai-based steelmaker Baosteel will raise its January prices for hot rolled coil, cold rolled coil, hot-dip galvanized coil, electro-galvanized coil and pickled HRC all by Yuan 50/metric ton ($8/mt), but keep silicon steel prices unchanged, it announced late Tuesday.
As a result, Baosteel’s Q235 5.5mm HRC increased to Yuan 4,472/mt ex-works without 17% VAT, while SPCC 1.0mm CRC rose to Yuan 4,806/mt non-VAT.
Some domestic traders said other mills were expected to follow suit as they were eager to push prices up to cover soaring iron ore costs. However, most traders contacted by Platts did not expect spot prices to be firmed up by mills’ higher ex-works prices.
Besides the fact that seasonal weak demand would undermine any attempt to raise spot prices, traders’ pessimistic outlook on the steel market and tight liquidity also prevented any increase. One market source added that some traders simply did not have enough cash flow for speculative buying, while some others did not dare to restock as they feared the market would resume a downward track after Chinese New Year just as happened earlier this year.
The comparatively low market inventories have been a key support for spot flat steel prices. The HRC inventories in 33 major Chinese cities totaled 3.98 million mt by December 6, down 4,000 mt from a week ago and about 120,000 mt from late October.
On Wednesday, Q235 5.5mm HRC prices were Yuan 3,490-3,510/mt ($575-578/mt) with VAT in Shanghai and Yuan 3,650-3,690/mt in Guangdong's Lecong steel market, both unchanged from the previous day. Local traders were unmoved about Baosteel’s price rises, saying buying on the spot market was not strong enough for prices to increase.