Baoshan Iron & Steel (Baoshan Steel), the listed-arm of China Baowu Steel Group, has opted to further lower its list prices for carbon steel hot-rolled coil (HRC) for domestic sales for May by Yuan 100/tonne ($14.2/t), according to its pricing policy released on April 10. Market sources said the East China steel giant’s decision to reduce its prices reflected weaker support from raw materials prices and the negative market sentiment.

Baoshan Steel’s adjustment followed the mill’s Yuan 50/t reduction seen in the prior month. Last Friday too, Angang Steel Co, another major flat steel producer in Northeast China’s Liaoning province, slashed its list prices for HRC by Yuan 150/t for domestic sales in May, Mysteel Global noted. Angang had rolled over its HRC price last month for April sales, as reported.

“The comparatively expensive raw materials steelmakers had procured earlier have basically been used up and steelmakers are using low-priced materials, which reduces their production costs,” a Shanghai-based steel analyst said. “Some hot coil producers are earning some profits now, though the profits are much lower than those enjoyed by long steelmakers,” he added.

Raw mats prices have softened of late. For example, Mysteel’s composite merchant coke price across China has been steadily declining since February 26 and as of April 10 had lost a total of Yuan 216.2/t from February 25 to reach Yuan 1,659.2/t including the 13% VAT, a 33-month low.

But bearish expectations on fundamentals for hot coil are also weighing on prices, Mysteel Global noted. “Actual demand for HRC has strengthened from the previous month, but it is not as robust as this time last year. And the weak demand from user industries of flat steel such as auto-manufacturing continues to suppress prices,” the analyst added.

Baoshan Steel’s price cut is also in accordance with softening market prices of HRC, with Mysteel’s national average price for Q235 4.75mm HRC as of April 10 being down Yuan 118/t on month to reach Yuan 3,390/t. In sharp contrast, the price of HRB400 20mm dia rebar benchmark moved up Yuan 29/t on month to Yuan 3,612/t on the same day, both including the 13% VAT.

For May, Baoshan Steel’s list prices for pickled and oiled coils will also decline by Yuan 100/t from April, and its prices for cold-rolled coils, hot-dipped galvanized steel, electrolytic galvanized steel and galvalume steel are slashed by Yuan 150/t from the previous month, according to the pricing policy. The reduction for colour coated sheet was a sharper Yuan 200/t, Mysteel Global notes.

The company has also opted to reduce prices for non-grain oriented electrical steel by as much as Yuan 100/t, though prices for heavy plate, section steel, and grain oriented electrical steel will stay unchanged next month.

Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com