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China's Baowu raises July hot-rolled steel price

12 Jun 2018 09:18 (+01:00 GMT)
China's Baowu raises July hot-rolled steel price

Singapore, 12 June (Argus) — China's largest steelmaker state-controlled Baowu has raised July-delivery prices of hot-rolled coil (HRC) for a second successive month, but reduced prices of some cold-rolled flat products.

HRC prices have been raised by 100 yuan/t ($15.60/t), while prices of non-auto-grade cold-rolled products were increased by the same amount. Prices of other cold-rolled products fall by Yn150-250/t.

Wuhan Iron & Steel, which was merged with Baosteel in 2016 to form the Baowu group, will increase HRC prices by Yn100/t next month while raising prices of steel wire and beam by Yn43/t and Yn150/t respectively.

The increase in HRC prices comes soon after some Chinese mills increased prices of rebar for the second time this month.

Spot HRC markets fell by a slight Yn10-20/t to Yn4,270-4,300/t in Shanghai and Yn4,200-4,240/t in Tianjin yesterday. Cold-rolled coil (CRC) prices dropped by Yn20/t to Yn4,580-4,620/t in Shanghai. Trading was slow yesterday, but traders expect prices to find support in the near term because of a fall in HRC inventories over the past few weeks.

The HRC spread — the difference between the HRC price and raw-material costs including iron ore, coking coal and scrap — has widened to Yn1,750/t from Yn1,620/t at the end of March because of robust restocking by machinery and vehicle sectors, Singapore-based bank DBS said in mid-May.

Baowu's gross profit margin in its steel business is likely to rise to 19pc in 2018 from 14pc last year, US bank Morgan Stanley said in April.

Baowu expects its sales and output growth to slow this year, in line with its expectation that China's steel consumption will either remain flat or fall slightly in 2018. It expects steel product sales of 46.68mn t this year, up by 1.1pc from 46.17mn t in 2017.

The company is concerned about the increasing cost of environmental management, which is currently at Yn130/t and expected to rise further this year, Morgan Stanley said in late May.