Securities Daily reports that some steel product EXW prices have gone beyond spot prices, an abnormal phenomenon that has come about because big steel producers have no inclination to cut prices.
Analyst believed that although some leading steel producers have an undeniable influence in pricing, they have to abide by the rules of the market.
Shagang, China's largest rebar producer, announced it was raising rebar EXW prices by another CNY 50 per tonne last week just after its price improvement of CNY 600 per tonne made earlier this month. Baosteel has also moved up the price for a second batch of carbon steel for September delivery and of HR&CR product prices by around CNY 600 per tonne. Their price adjustments have not been accepted by the market in spite of their prestige in the industry, which could be testified by the sharp diving steel prices in the domestic market in the past two weeks.
Futures followed hot on the heels of the spot market with rebar presenting a deep downtrend in the past two weeks after climbing up to CNY 4982 per tonne on August 4th and then falling to around CNY 4400 per tonne. What deserves attention is that domestic small and medium steel mills keep a wary eye on the price adjustment with an anticipation to expand their market shares.
Statistics showed that 60 wire rods and rebar producers made price adjustments last week, most of which moved their offers down according to market changes, in contrast to leading suppliers such as Baosteel and Shagang.
Analyst tbelievethat the steel price loss is mainly attributed to most steel producers' moves in adjusting EXW prices downwards given the market changes, apart from the part reason as dwindling end demand and speculation.
Market Department Director Lijian with Ma'anshan Iron & Steel Company said wire rod and rebar, characterized as low value added and acute competitive varieties, lacks concentration in industry, let alone monopoly and there is no nationwide steel mill which has the authoritative pricing power on these items. That may explain the sharp up and down of the market.
Source: Steel Guru
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