Chinese domestic HRC prices are falling continuously since August 5th 2009, thus lasting for a month, although the decline is becoming slower now, but the adverse factors remain in play casting ominous signs on Chinese HRC market. We can see that the China’s HRC market is under sever shock o say “Chaotic” and continues to be on downward trend.
Despite low sales and increasing inventories, Chinese steel mills are still not reducing HR output as their realization, even at prevailing prices, is more than their costs.
Adverse factors are dominating Chinese HRC market with prices on down trend and increasing inventories due to continued production despite low sales. On top of that market players are adopting wait and watch policy. Thus Chinese domestic HRC market is in bad shape
This is putting immense pressure on global levels for hot band as Chinese mills have become very aggressive on export front to counter depressed domestic market. Although the exact export levels would emerge on week opening, Chinese mills are reported to have gone below USD 500 on FOB basis in some cases this week. As per market reports, Beitai Steel has booked a 20,000 tonnes HR parcel at USD 543 per tonne CNF west coast of India l through a German trading house with an Indian large diameter pipe makers, which translates to less than USD 500 FOB after deducting ocean freight, banking costs and margins.
Chinese market players are upbeat on the likely course of Chinese domestic HR prices. A Mysteel survey of 46 steelmakers and 133 traders show that the majorities believe price of HRC will keep firm in the second week of September 2009.
But the rumbling has stated at Black Sea this week as Ukrainian HRC makers and sellers, who were increasing HR prices WoW basis for some time, have reduced FOB prices by USD 20 per tonne this week.