SHANGHAI, Mar 20 (SMM)－High inventories dampened prices of hot-rolled coil as it traded lower than ex-factory prices and costs, SMM learned. But high costs are likely to keep prices rangebound with limited downward room.
SMM believes that downward room is limited and estimates costs to stand at 4,000-4,100 yuan/mt in Shanghai, 4,050-4,150 yuan/mt in Lecong, and 3,900-4,100 yuan/mt in Tianjin in the short term. Prices are likely to fall further in the short term as steel mills are keen to clear inventories.
According to Chinese steelmaker Rizhao Steel, the average traded price in Shanghai stood 200 yuan lower than the ex-factory costs of 3,973 yuan/mt on Monday March 19. Delivered costs rose as high as 4,140 yuan/mt. Yangang Steel and Anfeng Steel also reported lower traded prices.
Trading was flat in the spot market on March 19, with prices 50-70 yuan/mt lower than the previous day. In south China, transactions were slow as downstream operations resumed slower than expected and as some plants had restocked before Chinese New Year.
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