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Settlement Pattern in East China Leads to Big Swings in Prices
Jun 5,2013 22:19CST
industry news
Source:SMM
Hot-rolled coil prices rallied lately with the increase outperforming that in rebar prices.
SHANGHAI, Jun. 5 (SMM) – Hot-rolled coil prices rallied lately with the increase outperforming that in rebar prices. However, price growth varied in by market. Hot-rolled coil prices in Shanghai rose RMB 100/mt to RMB 3,470-3,500/mt, prices in Tianjin grew RMB 50/mt to RMB 3,390/mt, and those in Lecong increased RMB 80/mt to RMB 3,590-3,600/mt.
 
Steelease believes that as purchasing prices of goods sent to east China were determined based on settlement prices on the 15th day following the arrival, large traders in Shanghai sell goods actively when prices fall to ensure sales and push down prices so that the purchasing prices will be lower, leaving higher profit margins for traders. Conversely, if they sell large amount of goods when prices are on the rise, they may suffer losses for resources sold earlier. Thus, most of them opt to limit supplies while prices are rising. That explains why may large traders in east China held back from selling in the past couple days, leaving limited goods salable to end users. Such situation was rarely seen in Tianjin, with price hike in Tianjin within a reasonable range. 
 
The settlement pattern for traders in east China may result in sharper movements in the market.
 
With respect to price trends in the latter half of this month, Steelease expects the tight financing and large amount of goods arriving in each markets will drive hot-rolled coil prices down.
Hot-rolled coil price

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