Baoshan Iron & Steel Co (Baosteel), the listed arm of the world's top steelmaker China Baowu Steel Group, is holding the list prices of its carbon steel hot-rolled coil (HRC) steady for domestic sales in February while raising them for March sales by Yuan 100/tonne ($14.3/t), according to the company's latest pricing announcement issued late on Monday.
The pricing announcement especially for March sales came a bit early this year, which was formerly expected to be released until February. This tactic reflects the pressure steel mills currently face in receiving new orders and their expectation towards future pickup in downstream demand following the end of Spring Festival holiday, a Shanghai-based analyst noted.
The pricing announcement for March sales was made quite early this year as usually, the company's price policy for that month would not be released until February, market observers noted. Bringing forward the announcement reflects the pressure steel mills currently face in receiving new orders and their expectations for a pickup in end-user demand after the end of next month's Chinese New Year holiday on February 23, a Shanghai-based analyst noted.
"The core aim is to encourage customers to place orders in advance," he commented.
On the supply side, HRC production is expected to rise further in coming weeks as more steel mills bring their rolling mills and blast furnaces into operation after finishing their annual overhauls, as reported.
On the demand side, Mysteel's recent survey found that hot coil stocks held by manufacturers and coated sheet producers were relatively low. However, most of these enterprises are still reluctant to replenish their stocks partly due to weak expectations regarding future price trends, a disinclination seen as adding more pressure to flat steel prices and squeezing the mills' profit margins.
On January 5, Mysteel assessed the national price of Q235 4.75mm HRC at Yuan 3,283/t including the 13% VAT, down by Yuan 45/t or 1.4% from that on December 5.
In this context, Baosteel's price adjustment is seen as a response to the current stagnation in the flat steel market and an attempt to persuade end-user enterprises wanting coils for March to place orders to early, according to the analyst.
Meanwhile, Shagang Group, China's largest privately-owned producer headquartered in Zhangjiagang in East China's Jiangsu province, is maintaining the list price of its Q235 5.5*1500mm HRC at Yuan 3,500/t for January sales. Shagang is also holding its price for SPHC 4*1250mm HRC at Yuan 3,510/t for sales this month, according to the company's announcement released on January 1.
Source:Mysteel
