China's HRC Market to Eye a Round of Growth after Mid March
"China's HRC market is still in a stage of correction characterized mainly as stability. But a round of rising movement is expected to come to light after mid March." said Luo Yaoshun, GM with a sheet/plate steel trading company in Shanghai lately.
After Spring Festival, he said, HRC market seemed to tend up with mild gains in spot market. Some traders longing for price rise made tentative moves to raise their offers, but they haven't seen evident changes in the market due to lack of demand support by end users. On Feb 23, some dipped their prices slightly and the HRC electronic trading market also eyed a downward fluctuation movement on the first trading day upon Festival.
"Downstream demand hasn't been released so far." Luo commented. Some consumers haven't fully resumed their operations and some still in suspension, based on his company's survey.
There is an erratic phenomenon this year that most end users didn't purchase steel products for preparation before the Festival, not in line with their usual practice, he added.
Baosteel's has scaled up 300 yuan/ton for both HRC and CRC products in general in its March steel policy, but this hasn't triggered the market to move up as usual. The root reason is the insufficient demand, he said.
"Besides, high record inventory is another factor." Luo said. HRC stockpile in Shanghai market continue increasing. Statistics by authority concerned shows that the figure in Shanghai has arrived at about 1.5mln tonnes after the Festival, but actually it is expected to beat 1.8mln tonnes at least.
"As a result, HRC market will be wavering around the level of 3850 yuan/ton within a range of 30-50 yuan/ton from now on till mid March. Sharp fluctuation is hard to see in the period." he analyzed.
As to the conclusion of a round of price rise after mid March made by Luo, he gave a few factors as follows. The first is the demand support. Downstream users will basically come back to regular production as of mid March and demand for steel products will increase.
The second is the drive of high cost. A rumor in circulation about possible rocketing prices of ore and other materials for steel making for this year has made steel mills bear heavier burdens. They won't cut their ex-works prices certainly, especially when Baosteel issued its March price policy, but are more likely to follow suit.
These two factors will lead to the conclusion that HRC market will definitely go up in future. The momentum for the growth may be strong, even as equivalent as the record of last year where HRC roared by 300-400 yuan/ton in a month. 4000 yuan/ton is no doubt, and 4200 yuan/ton is expected to arise, but the higher will rely on the demand/supply situation in the future, he said.
