SHANGHAI, May 31 (SMM) – Traders of hot-rolled steel turned cautious in ordering June resources from steel mills as they were in the red due to high costs in May, SMM learned.
As May comes to an end, subsidies that steel mills offered for hot-rolled resources traders ordered earlier in May was partially or completely cut as market prices climbed.
In the Shanghai market, the average hot-rolled steel price stood at 4,217 yuan/mt in May while average costs amounted to at 4,224 yuan/mt. This brought the losses to 7 yuan/mt.
In Tianjin and Lecong markets, traders’ average losses amounted to 4 yuan/mt and 74 yuan/mt, respectively.
Steel mills continued to raise their offers for June and this further held traders back from buying. Most bookings seen recently were from end-users rather than traders, sources told SMM.
Hot-rolled steel prices are expected to stay firm given various environmental protection initiatives by the government in the first half of June and the low inventories in the market. However, growing supplies from steel mills are believed to be uninterrupted in the short term as mills continue to chase high margins.
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