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HRC prices show most upturn in China - 29 May 2012

Chinese domestic hot rolled coil prices slightly rebounded on Monday in tandem with recovering screen trading prices.

Most market sources contacted by Platts Steel Business Briefing expect price volatility will continue in June because of poor demand. Although some new stimulus packages are expected for the car and white goods industries, market participants don’t think the new policies can immediately improve the steel market.

Q235 5.5mm HRC prices in the Shanghai and Guangdong Lecong steel markets were up by RMB 10-20/t on Monday to RMB 4,120-4,150/tonne ($651-656/t) and RMB 4,240-4,260/t respectively, both with 17% VAT. During the same day, the widely-traded August HRC contract on the Shanghai Steel Exchange Centre increased by 1.15% to RMB 4,117/t.

Traders say they are temporarily calm about volatility in HRC prices as they have kept their inventories at low levels, but add that their outlook for June is still negative due to China's economic slowdown. A Lecong-based trader says HRC inventories in the Guangdong market have slightly increased by 20,000 t over last week to around 740,000 t due to falling steel prices, but the inventory is still about 100,000 t lower than in February.

Some media reports say the Chinese government will soon launch a new vehicle trade-in policy and car subsidy program for rural areas to boost the sluggish vehicle manufacturing sector. However, some traders tell Platts SBB that they will keep flat steel inventories at low levels as it is too early to predict the success of these policies.


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