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Chinese hot rolled coil prices continue to descend - 8 May 2012

Chinese domestic hot rolled coil prices have continued to trend downwards since the start of May amid negative outlook for the market in the following months.

Q235 5.5mm HRC was prevailing at RMB 4,250-4,270/t ($675-678/t) with 17% VAT in Shanghai and RMB 4,350-4,370/t with VAT in Guangdong Lecong steel market on 7 May, down RMB 40/t and RMB 20/t respectively from late April. Prices have dropped about RMB 100/t since early April, wiping out around half of the increase achieved during February and March.

Prices have found it hard to rise but easy for to fall so far this year due to the lukewarm recovery of the manufacturing sector, traders told Platts Steel Business Briefing. Traders have been unwilling to restock low inventories because they don’t believe steel prices will show much more strength in the following months than in April-May, which is traditionally a stronger season for flat steel products.

Also, May’s HRC mill prices have been left more than RMB 100/t higher than spot market prices, further denting traders' enthusiasm for restocking.

Shagang’s Q235 5.5mm HRC price for May is tabled at RMB 4,380/t with VAT, RMB 110-130/t higher than Shanghai spot market prices, Platts SBB notes.

A Lecong-based trader said HRC inventories in Lecong have declined by around 70,000 t from late April to 700,000-750,000 t. In addition to slightly improved demand, the reluctance of traders to book from mills is also a major cause of the declining stocks, he said.


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