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Chinese semi-finished product prices weaken

Thursday, 10 November 2005 07:55:21 (GMT+3)   |  
       

Chinese semi-finished product prices weaken

Influenced by the decrease in the price of finished products, semi-finished products experienced a weakening in transaction volume and price earlier this week. Price of semi-finished products started declining on Monday, November 7. Compared to the previous week, by the close of trading on November 9, the common carbon billet price in Tangshan, Hebei Province, was down RMB 50/mt ($6) to RMB 2’550/mt ($316), and 20MnSi billet was down RMB 80/mt ($10) to RMB 2’600/mt ($322). In late October, Chinese semi-finished prices began rallying. Semi-finished producers were unable to capitalize on the price increase, however. Order books of finished product were not full since traders held cautious attitudes and they were not active in placing orders. In addition, the commercial activity of semi-finished products did not pick up because rolling mills did not dare to purchase semi-finished product in large quantities due to the rapid price increase. So once the finished product prices started declining again, the semi-finished producers were all too eager to sell. This led to a sharp price decline in the short term. Inventories of long products such as wire rod and rebar are relatively low in both the market and at steel mills. Hot rolled sheet/coil and medium plate inventories are low in the market, but high at the steel mills. This has contributed to traders’ cautious attitudes. They are wary of suffering great losses like those that happened when prices were slashed due to high inventory levels. Taking into consideration the above-mentioned market condition, finished product prices are likely to bounce back relatively soon. There is plenty of room for long products to increase in price; however, the same cannot be said of flat products. Therefore, billet prices will likely recover from the price cuts earlier this week. However, chances are slim that slab prices will follow suit. SteelOrbis Shanghai

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