Baoshan Steel cuts October HRC prices by $14/t
Source: Mysteel
Sep 10, 2019 17:45
In its monthly pricing policy, Baoshan Steel does not provide exact list prices for its individual products but only the margin of increase or decrease. The latest adjustment follows the steelmaker’s Yuan 50/t price surge for September sales.
Baoshan Steel’s move took industry analysts by surprise, especially when market prices of HRC had begun recovering since early September given that actual demand seems to be reviving, Mysteel Global noted. Mysteel’s national average price for Q235 3mm HRC increased by a total of Yuan 44/t from August 30 to reach Yuan 3,916/t including the 13% VAT as of September 9.
“It’s a bit surprising to the market that Baoshan Steel opted to lower prices when actual demand shows signs of recovery and the procurement price of raw materials has increased,” a Shanghai-based steel trader told Mysteel.
“As China’s major flat steelmaker, Baoshan’s move will surely influence market sentiments, which might result in prices declining. However, the influence is limited as prices will still mainly depend on to what extent actual demand perks up in the near future,” he added.
In contrast to its decision on prices of its HRC, Baoshan Steel opted to raise its list prices for carbon steel cold-rolled products by Yuan 100-150/t, Mysteel Global learned from its pricing policy.
Another Shanghai-based market insider close to Baoshan Steel said the steel giant’s decision was due to the high HRC production and low CRC supply.
“Nationwide, HRC production saw significant rises recently as most hot-rolled capacity is located in North China and the operation restrictions on mills there were lighter than had been expected. But CRC production has stayed low as the producers opted to ease back on their operations due to the deep losses they were incurring,” the industry source told Mysteel.
HRC production among the 37 flat steelmakers under Mysteel’s survey over August 29-September 4 hit a new high since July 2018, gaining another 4.8% on month to 3.4 million tonnes. Yet over the same period, CRC production among Mysteel’s 29 surveyed mills continued to languish after hitting a historical low in June, rising by just 2% on month to 764,400 tonnes, Mysteel’s database showed.
Another East China-based steel trader agreed. “The high levels of HRC production could be a hidden danger to the market in October, if the demand recovery fails to materialize as hoped,” he echoed. “HRC prices would not stand firm.”
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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