An unexpected price freeze by a top Chinese steel mill signals that other players in the world’s biggest steel sector are likely to show similar caution for the rest of this year as oversupply continues to dog the market, analysts said on Monday.
China’s largest listed steelmaker, Baoshan Iron & Steel,which traditionally sets the tone for monthly price changes, said on Monday it would keep November prices for key steel products unchanged from October.
Its major peers such as Wuhan Steel and Angang are expected to follow Baosteel’s lead, keeping price rises to a minimum or eliminating them entirely.
Baoshan, or Baosteel, said it would maintain prices for hot-rolled coil and cold-rolled coil unchanged from October after it had raised prices by up to 8 percent.
The move was unexpected as spot prices were rising after China returned from a week-long national holiday
I can’t understand why the company made such a decision as the domestic market looks good at the moment,” said Du Hui, analyst with Qilu Securities. “It might still be concerned about the demand outlook for steel for the rest of this year.”
Although the benchmark prices remained the same, Baosteel did say it would raise hot-dipped galvanised coil prices by 150 yuan ($22.49) per tonne and keep offering incentives for some other products.
“I am still positive for steel prices in more than one year, and Baosteel should have had some room to raise its November prices,” said Zhang Shibao, an analyst with China Merchants Securities.
Source: Reuters
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