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Chinese HRC market sloth continues as prices fall further - 10 July 2012

Sluggish buying pulled Chinese domestic hot rolled coil prices down further on Monday despite the interest rate cut last week. Meanwhile, China’s consumer price index was up 2.2% in June, the lowest growth in 29 months. Although the cooling inflation leaves more room for monetary loosening for the rest of this year, it also indicates a continued slowdown of China’s economic growth which, in turn, explains the slothful steel market, some traders say.

On Monday, prices of Q235 5.5mm HRC were around RMB 4,140-4,160/t ($650-653/t) with 17% VAT in Guangdong's Lecong steel market and RMB 4,060-4,080/t with VAT in Shanghai, down RMB 20-40/t from last Friday. Meanwhile, some traders which were trying to speed up sales offered even lower prices in Lecong at close to RMB 4,100/t with VAT.

Traders tell Platts Steel Business Briefing that the summer season has further dented already poor demand and the loosening monetary policies have so far been too mild to really boost the manufacturing sector. Some dealers have therefore been eager to dispose of stocks in case spot market prices fall further.

One trader tells Platts SBB that HRC inventories in Lecong were almost unchanged over the past two weeks due to lack of buying interest from either stockists or end users. Traders expect major steel mills, such as Baosteel, to trim their list prices further for August. Baosteel cut its July HRC prices by RMB 200/t, and it is expected release August list prices later this week.

 

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