Source: China Industry News 2006-09-05 16:45
The domestic steel giant Baosteel announced on August 22 its sales price adjustment measures in the fourth quarter. The main cold-rolled products were reduced by 200 yuan per ton compared to the third quarter. High value-added products such as hot- dip galvanized steel and color coated steel prices were slightly higher. Rising prices of some low-end construction products such as wire rods have remained unchanged. Prior to this, Baosteel’s fist product prices rose by 6% to 8% in the third quarter, and in the second quarter, their price increases were all above 10%.
Insiders pointed out that after the price adjustment of Baosteel, the domestic steel market price did not change much. This shows that after the major adjustment in July, domestic steel prices have basically stabilized, and it is unlikely that steel prices will continue to decline.
In the past, Baosteel's new market price will bring great shocks to the market. Some small and medium-sized steel mills will follow their price adjustment policies and the spot market will respond quickly. But this time, Baosteel's price adjustment is like sinking into the sea, and it has not stirred up the spot market. On August 23, the prices of HRC and CR coils delivered by Baosteel in Shanghai market were all flat with those of the 22nd. The prices of individual steel products of other steel mills were mixed, but the range was not large. In the Beijing market, it is not only that the coil prices of steel mills in North China have remained stable, nor have the prices of construction steel products changed.
According to industry insiders' analysis, the reason why Baosteel's price adjustment market is well-resolved can be classified into two points: First, Baosteel's price adjustment is not too large. Many steel products in the market currently have "upside-down" prices that are higher than retail prices. In the circumstances, the price cut of 200 yuan has not yet fundamentally changed the situation of price inversion, and it is not surprising that there is no impact on the market. Second, the round of price cuts in early July has severely reduced the profit margins of manufacturers and distributors. After more than a month of adjustments, the current space for price declines is minimal and the market has begun to show signs of continued stability.