Google Website Translator Gadget

Monday, March 7, 2011

Chinese steelmakers to bear heavy pressure of price correction


Monday, 07 Mar 2011

It is reported that an analyst in an interview said “EXW prices of large scale steelmakers may be stable in April, but will certainly witness a correction in May.”

Actually, analysts were not the only group who held the pessimistic attitude to market. Part of traders decided to stop accepting ordering from steelmakers due to upside down between EXW prices and spot prices. It is possible that the operation in H1 of 2011 may be similar to that in May and June 2010.

1. Pressures after continuous price adjustment

Large scale steelmakers like WISCO, Baosteel, Angang, Benxi Iron and Steel, Shougang and HBIS issued EXW prices for March delivery after Lunar New Year with main products, CRC, HRC increased by CNY 300 per tonne.

WISCO was the first steel mill to raise EXW prices with margin CNY 200 per tonne to CNY 400 per tonne for instance

1. Wire rod up CNY 200 per tonne to CNY 330 per tonne
2. HRC up CNY 200 per tonne to CNY 400 per tonne
3. CRC up CNY 100 per tonne tone CNY 300 per tonne
4. Galvanized products up CNY 200 per tonne to CNY 350 per tonne

Following WISCO, Baosteel also raised its March products prices

1. HRC up CNY 300 per tonne
2. CRC appliance plate CNY 260 per tonne
3. Auto plate up CNY 300 per tonne
4. Galvanized up CNY 260 per tonne
5. Slab up CNY 300 per tonne

After that, Angang also raised its EXW with growth margin similar to WISCO and Baosteel.

After EXW prices increased a lot, costs of traders and other end-users were pulled up rapidly. In addition, domestic steel prices showed plunge in the second week after Lunar New Year, showing upside down between spot prices and EXW prices. Part of traders and end users had to stop ordering. And they estimated that the upside down situation will not last long, possibly ending with steelmakers compromise to reduce EXW prices.

However, steelmakers may not cut its EXW prices so soon and given they bears heavy pressures. They may possibly give traders kinds of discount instead of direct price decrease.
(sourced:mysteel)

Tags :wire rod prices, galvanized products, auto plate, slab, Lunar New Year, Angang, Benxi Iron and Steel, Shougang,

No comments: