According to Mr Li Debo, GM of a Shanghai based industrial Company, "Shanghai''s HRC price is expected to dip slightly amid correction in May in light of the current market operation."
Based on his observation, Shanghai HRC market price presently has kept falling by some CNY 20 per tonne to CNY 40 per tonne or even more with some traders a sign of the arrival of the correction stage, mainly due to the insufficient end demand and bleak transactions. He said many HRC users he visited these days have adequate stockpiles, of which a steel structure company owned 20,000 tonnes to 30,000 tonnes of resource purchased at lower price in early period and preferred not to buy any more from the market.
Mr Li said "Without demand or evident release of demand, it is rather difficult for HRC price to further go up. Fluctuating slide arises instead just as what is happening in the market."
He also learned unfavorable news that steel mills have made some changes in treatment with long term contracting traders by requiring them to strictly carry out long term contract with the order sizes no less than 30% of the agreed amount. This indicated the waning sales with steel mills.
Mr Li said export orders are not so satisfactory owing to the rippling international HRC prices and the insignificant difference between domestic and overseas offers which makes exporting no advantage in returns. He said that "So the dwindling exporting order will likely cause an augment in domestic market in May or some time in future, deepening the demand and supply unbalance. He added that this would be a factor for further correction of HRC market in May.”
Mr Li said customers in other parts of China are showing preferred interest in Shanghai-sourced HR products because of the relatively lower price here than other places in general. One kind of HRC product is offered at CNY 4500 per tonne in Shanghai, whereas the very same product is quoted at CNY 4800 per tonne in Southwest China cities like Chongqing and Chengdu, costing an extra CNY 200 per tonne after consideration of the CNY 100 per tonne as freight from Shanghai to Chongqing.
Mr Li said "The price advantage here has really helped the distribution of resources, expecting that HRC price in Shanghai will go down amid fluctuation in May and is possibly to rebound once the end demand is fully released after price correction.”