In a significant move, leading Chinese steelmakers, including Baosteel, Angang, and Bengang, have announced price reductions for flat rolled products for September sales. This decision reflects the challenging market conditions that these companies are currently facing. Baosteel, China's largest flat steel producer, has lowered prices for hot-rolled and cold-rolled products by 100 yuan per metric ton, approximately $14, consistent with its August pricing strategy. Additionally, the company has cut prices for thick-rolled products by 150 yuan per metric ton, around $21.
Angang and Bengang have also joined the trend, slashing prices for most of their products, including hot-rolled coils and cold-rolled coils, by 200 yuan per metric ton, approximately $28. These reductions indicate a broader trend among Chinese steel manufacturers as they respond to increasing market pressures and declining demand. The upcoming pricing announcements from Taiwan's China Steel Corporation and Vietnam’s Formosa Ha Tinh Steel are anticipated, as these firms are likely feeling the influence of the leading Chinese manufacturers' pricing strategies.
Despite a decline in production, hot-rolled coil stocks in the Chinese market increased last week, suggesting a mismatch between supply and demand. The spot prices for these products have been falling but at a slower pace than futures prices, indicating some resistance from traders who are hesitant to lower prices further. This reluctance may stem from expectations of future price recoveries or an unwillingness to accept lower profit margins.
The outlook for China's steel sector remains bleak, primarily due to a prolonged slump in the real estate market, which has historically been the largest source of demand for steel. As construction projects dwindle, steel prices continue to fall, leading to shrinking profits for industry players. The government’s focus on realigning the economy for long-term growth has not provided immediate relief to the steel sector, leaving manufacturers to navigate a difficult landscape with reduced margins.
