Baosteel Group Corporation, Angang Steel Company and Wuhan Iron and Steel Corporation released their September order prices on Aug. 16, all of which rose according to market expectations.
The prices of all varieties of Baosteel products directly or indirectly increased by 150 to 800 yuan per ton. Prices of Angang Steel’s major products have risen by 200 to 1,000 yuan per ton. Wuhan Iron and Steel increased prices of its major plate products 200 to 800 yuan per ton. These increases signify a pessimistic attitude toward the future of the steel market.
Compared with the other two steel factories, the price adjustments at Baosteel are relatively moderate. The market has expected the September order prices of steel to rise. Before this price adjustment, there were market rumors that the order situation of Baosteel was not optimistic, which is probably the reason why its price adjustment was not so severe.
This round of steel price increases began on July 19. By Sept. 16, the Shanghai market price of 5.5 millimeter hot-roll coils is expected to reach 4,250 yuan per ton, an increase of 420 yuan per ton compared with the former low point.
Along with the price adjustments of steel, the price of raw materials also rose rapidly. The spot price of iron ore imported from India on Aug. 16 was 150 to 153 U.S. dollars per ton, a cumulative increase of 19 percent. The increases in the cost of ore overtook the future price of steel, which will reduce steel mills’ profits despite the price rise. However, this will add production cost support to the rising trend in future steel prices.
Hu Yanping, an analyst from the Umetal Research Center, believes that the current overall supply side of China’s steel market is modest. The stock pressure of plate steel is rather large while that of the screw-thread steel and wire rod is small. In addition, the peak season is coming, so the future steel price is still expected to rise.
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