According to Mr Li Debo GM of Shanghai Kaiqian Industrial Co Ltd, the HR coil steel price may see another climbing trend in May possibly to reach CNY 4700 per tonne to CNY 4800 per tonne.
During the week starting April 12th, HR coil price continued moving up and the quotation was prevailed at CNY 4570 per tonne, CNY 500 per tonne to CNY 600 per tonne higher than at the start of March. Mr Li said the sales condition also improved than a period ago.
He said that "Our sales volume of HR coil is limited to around 1500 tonne, we do not intend to expand selling."
The buyers include middlemen and end users. For end users, they are mainly machinery, fittings and steel structure manufacturers, who buy mostly 3.5mm to 13.5mm coils.
Mr Li said the market price is to continue upswings and should reach CNY 4700 per tonne to CNY 4800 per tonne in May.
He said that
1. The first reason behind the rising trend is demand expansion and subsequent declining stocks. In the past weeks, HR coil stock is on continuous decrease, by 20,000 tonnes to 30,000 tonnes per week in Shanghai.
2. New arrival at the spot market is limited since only a small volume is held by the traders. His company also suffered halved order booking from the steelmakers and the ordered delivery is also delayed. Steelmakers are selling well and export is getting better too. New resources on the market are expected to be low in Apr and May with the stock to scale down further.
3. Purchase price of HR coil is increasing, indicating resources on the future market should be more costly and thus prevent market price from falling.
Mr Li said they would choose to pull up the selling price when sales reach certain quantity. For instance, the price will be lifted by CNY 30 per tonne to CNY 50 per tonne when 1000 tonnes are sold, and by CNY 30 per tonne to CNY 50 per tonne again if sales keeps climbing. So that the market will have time to adapt to the changes. In order to draw back cash he would also give some discount according to the market performance.