Low-Priced Hot-Rolled Coils from SOEs Enter Lecong and Wuhan, Oversupply Pressure to Increase

SHANGHAI, Apr. 12 (SMM) – Steelease earlier reported new trading modes for domestic steel mills. In addition to Shanghai, Steelease confirm that resources traded via new trading patterns are also flowing into Wuhan, Tianjin and Lecong.

One trader in Fujian sold RMB 15,000 mt of resources of Chengde I/S in Lecong Thursday with prices offered at RMB 3,850/mt, RMB 80/mt lower than market prices and ex-works prices of steel mils. State-owned mills now often sell goods to traders via “buy it now” purchase, instead of using settlement prices 15 days after the arrival as private traders favored this type of payment so as to avoid any default of steel mills.

Ansteel’s hot-rolled coils are expected to enter the Wuhan market, while traders in Tianjin are also starting to purchase resources of Chengde I/S. The deliveries to Lecong reflected that state-owned mills were planning to develop inland market where competition was less fierce with large amounts of goods already arriving in Shanghai. In this context, oversupply pressure will be on the rise across the nation.