SHANGHAI, Mar. 7 (SMM) – Hot-rolled coil inventories increased after the Chinese New Year holiday. Inventories in Shanghai and Lecong grew rapidly with the Shanghai market dominated by low-priced resources. Whether steel mills will cut coil output given the price cuts attracted wide market attention.
Steelease as learnt that output will unlikely fall in March as the peak-demand season will fall in March and April and as prices for iron ore will remain firm. Meanwhile, coil prices were around RMB 4,000/mt, with its profit margin, though narrowing, still relatively high. Thus, steel mills are willing to produce goods with higher profitability. Hot-rolled coil output of Rizhao Steel in March, excluding more working days during the month, will be up 25% from February’s level. In addition, Rizhao Steel has established company for spot trading in Shanghai, which will leave great inventory pressure for hot-rolled coil market in east China. Meanwhile, Anshan I/S started expanding its foreign trade business, and other steel mills will also place more importance to sales of their subsidiaries, further weighing on market prices.