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HRC prices dip on weakening confidence in China - 19 September 2011

Confidence in the Chinese domestic hot rolled coil market has been eroded as end-user demand shows no sign of recovery. The negative outlook for October has also spread after Wuhan Iron & Steel decreased its HRC list prices for delivery next month.

Meanwhile, market sources say that, although Baosteel has increased its October HRC list prices by RMB 60/tonne ($9/t), this is mainly because maintenance stoppages will affect its HRC output in October.

Given the weak sentiment, spot offers of Q235 5.5mm HRC have decreased by about RMB 50/t from late last week in Shanghai to RMB 4,710-4,740/t ($736-741/t) with 17% VAT, and by RMB 30/t in Guangdong’s Lecong steel market to RMB 4,880/t with VAT.

Traders tell <b>Steel Business Briefing</b> that they intend to speed up sales as stocking material for September-October now seems unwise. They say that, given expensive loan costs, it is very difficult to make profits in the next few months as soft demand has ruled out large price increases.

However, the stagnant HRC market and falling prices have made transactions very difficult. Some market watchers say traders are looking forward to a price rebound so that they can dispose of stocks with better prices. However, this eagerness will only make a rebound, if there is any, short-lived, SBB is told.

A Shanghai-based analyst says the HRC market inventories in 23 major cities started swelling again last week. As it is unlikely that traders are stocking HRC, the rising inventories are more likely to indicate slow and weak buying in the spot market, the analyst adds.

 

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