Price trends in the Chinese market have begun to reverse upward, coupled with Baosteel’s continued price hikes for September; this signals that Chinese steel mills are actively conveying the message that prices have bottomed out and are rebounding.
Market participants believe that upstream mills are unwilling to engage in price-cutting competition with the spot market, opting instead to drive market expectations through price increases. However, the situation in the Taiwanese market differs. China Steel Corp. (CSC) announced that its September prices would remain flat, though it continues to offer slight price reductions through special project arrangements.
Previously, low-priced hot-rolled coil (HRC) from China, India, Indonesia and Vietnam had been driving down prices in Southeast Asia, forcing Taiwanese mills to face immense competitive pressure from HRC imports.
Nevertheless, the market assesses Baosteel’s modest price hike as likely exploratory in nature, insufficient on its own to reverse the current trend. The real focus going forward will be whether other major Chinese mills follow suit and whether HRC export prices can be raised.