It is a month already passed after Chinese New Year but situation in the steel market here didn’t become clear. An expected reviving after the holidays did not happen so the demand remains rather low. Time to time rumors about further hardening of government credit and investment policy are flying within the market and may weaken it even more.

A powerful negative factor remain high stocks, still keep increasing. The highest stocks are of construction steel, which demand shortened due to bad weather conditions. However, hot rolled coils are also obviously overproduced in the country.

Nevertheless, despite all negative aspects, Chinese steel companies keep increasing their sales prices. Average EXW price level for the most of steel products exceeds its market level. For example, by Mysteel data HRC cost in Eastern provinces in the beginning of the week was averagely 3950 Yuan per ton ($ 578/t) from a stock, while steelmaking companies’ offers were over 4000 Yuan/t ($ 586/t) EXW.

Despite any noticeable progress in the consumption Chinese steelmakers are quite optimistic and say they are ready for further increases. Their moods are shared at Shanghai exchange where futures contracts reached highest level during recent seven months. But this increase is hanging in the air, majority of consumers keep waiting.

Such dual situation arises grounded anxiety at plenty of market participants. Some experts believe in possible rapid price fall caused by excessive supply. Actually, any definite sign (like hardening of credit policy) may launch panic reaction, which lead to mass sales of stocks and price fall. But such scenario could be a real catastrophe for local steelmaking companies which were those who organized this price increase opposite to market logic. Starting point for these increases is coming growth of price for imported iron ore which will be the most painful for large corporations which succeeded to complete long term contracts with raw materials suppliers. Iron ore price increase for them may make 50% to the current level and even more. Middle and small steel producers buy iron ore now by high spot prices, but even current prices are overwhelming for them. That is why everyone should increase price for steel, and all Chinese steelmakers are completely unanimous here. It is possible to guess that even if negative scenario takes place in the local market, Chinese steel producers will hold their sales prices up to the end.

Export starts to play more important role for Chinese steelmakers. As expected, February steel export to exceed 2.9 M tons of January, and in March HRC only may reach to a million tons. Chinese companies keep increasing export quotations. HRC reached $ 580-600/t FOB, but in the second half of March the largest suppliers aim to put the price to not less than $ 600/t FOB. At least this is essentially lower than for instance prices for Japanese hot rolled coils which may reach even to $ 700/t FOB in Q2.

With favourable conditions Chinese exporters obviously will try to strengthen their presence in Middle East too, taking into account freight rates are not quite high now. So Russian and Ukrainian steelmakers should pay special attention to “Chinese factor” when planning their sales policy.

Chinese HRC local and export prices: (to see the chart go to the source of this article at http://www.rusmet.com/news.php?id=16806  )

Today, Shanghai aluminum shocks fell slightly after the opening bell, the contract 1005 closed at 16775 points in the afternoon, down by 90 points or 0.53%, trading at 16740-16870. Lighten up their holdings of more than 2300 hand, and the trading volume was in sharp decline. The spot market, the Yangtze A00 aluminum transaction priced 16,280-16,320 RMB/T, up by 40 RMB/T; Shanghai A00 aluminum ingot transaction 16,280-16,320 RMB/T, up by 15 RMB/T; Guangdong Nanchu A00 transaction of aluminum ingot 16,240-16,400 RMB/T, up by 50 RMB/T.

on the surface, even though aluminum at home and abroad were facing the pressure of excess, and the better market sentiment and the recovering economy played a boost. However, the current aluminum faced the biggest uncertainty coming from macro-economy. Anything about the related contraction were likely to suppress the news of the renewed decline in aluminum prices. Thus, the aluminum is expected to remain high oscillation posture before the entire global economy is expected to clear.

Today, the domestic parts of scrap aluminum Quoted stably; pricing was basically the same as the previous session. A small amount of trading was in the market. Goods holders held firm quotations with a clear intention of selling. Demand for the downstream businesses was slow, mainly in the inquiry part and waiting and seeing attitude. Latest Market Price: Shred Tense 13,150 RMB/T, Shred Taint 12,950 RMB/T.

Taken together, the current negative factor for aluminum was mainly the adequate supply of inventory, China’s primary aluminum inventories raise further, but not the stock market in the short-term was on focus. Aluminum was temporary balance; the overall market outlook will continue to follow the trend of the rebounded metal market. Increased cost of domestic electricity profit is an important factor in the market bullish.

(1RMB=0.1465USD) Source: www.worldscrap.com

Motor copper $7,343
#1 Bare Bright $7,943
Shred Taint $1,850
Shred Tense $1,879
#1 Nickel $23,143
Shred Zinc $2,057
304 SS Sabot (18-8) $1,957
Lead $1,929
HMS $360
AOO Al Ingot $2,314
Shred SS (Ni = 7.8~8.0%) $2,000
Steel-making Pig Iron $399
Casting Pig Iron $421

Source www.worldscrap.com

However, trading was slow ahead of crucial U.S. payrolls data expected to show a big loss of jobs due to major snowstorms last month.

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Three-month copper on the London Metal Exchange rose $80 to $7,450 a tone, up 3.5 percent on the week, due to big gains fuelled by initial supply worries after a massive weekend quake hit top producer Chile.

Chinese Premier Wen Jiabao, said the country would stick to an appropriately easy monetary stance and an active fiscal policy to counter the lingering impact of the global credit crunch.

Analysts say the move suggests demand from China will stay strong as it feeds its economy targeted to grow 8 percent this year.

Shanghai’s benchmark third-month copper gained 430 yuan to close at 59,750 yuan ($8,753) a tonne, posting a 3 percent weekly gain.

Copper stocks at warehouses monitored by the Shanghai Futures Exchange dropped a small 858 tonnes from the previous week to 148,620 tonnes, the exchange said.

That compared to a 28 percent jump the prior week which brought inventory to 149,478 tonnes, the highest level since late September 2002.

Shanghai copper’s premium over LME copper has dwindled to about 250 yuan on Friday from around 1,000 yuan a week ago.

LME copper prices are up just 1 percent this year after surging more than 140 percent in 2009 largely on Chinese demand which some analysts say should stay sturdy to support robust growth as recovery elsewhere in the world remains shaky.

Motor copper $7,329
#1 Bare Bright $7,871
Shred Taint $1,843
Shred Tense $1,872
#1 Nickel $21,571
Shred Zinc $1,979
304 SS Sabot (18-8) $1,886
Lead $1,914
HMS $360
AOO Al Ingot $2,286
Shred SS (Ni = 7.8~8.0%) $1,957
Steel-making Pig Iron $399
Casting Pig Iron $421

Motor copper $7,143
#1 Bare Bright $7,686
Shred Taint $1,857
Shred Tense $1,886
#1 Nickel $21,786
Shred Zinc $1,992
304 SS Sabot (18-8) $1,843
Lead $1,914
HMS $360
AOO Al Ingot $2,300
Shred SS (Ni = 7.8~8.0%) $1,914
Steel-making Pig Iron $399
Casting Pig Iron $421

Source www.worldscrap.com

(1RMB=0.1465USD)