Mills Are Hesitant to Raise Lift Prices

Sentiment in the Chinese steel market continued to improve last week, but mills are hesitant to raise lift prices as end-user demand remains weak. Hebei Iron & Steel kept its August prices for hot and cold rolled coil and end-July prices for rebar unchanged from the previous months. East China's Shagang raised its end-July rebar prices by RMB 30/tonne ($5/t). That demand is weak is being reflected in the spot market; Rebar prices are expected to fall this week as high prices dissuade buyers from fresh purchases, as Steel Business Briefing reported. HRC demand is also generally weak, but spot prices rose RMB 50-60/t in Shanghai and Guangdong's Lecong markets on Friday owing to improved sentiments and low stock levels. A recent survey of Chinese manufacturers shows the sector started to shrink in July for the first time in twelve months, suppressing HRC demand. According to the China Iron & Steel Association (CISA), weak flat steel demand was also partly responsible for the 3.1% month-on-month drop in crude steel production in the first ten days of July. But CISA doesn't expect any major declines in flat steel prices as inventories remain low and raw material prices high. Low stock levels for flat steel will persist this month as steelmakers lift long steel output to meet demand from Beijing's house building programme. The Steel Index's 62% Fe reference price finished the week nearly 0.5% higher at $175.10/dry metric tonne CFR China. Many Chinese mills appeared to favour domestic ore, production of which was up 21% m-o-m in June. Ore port stocks also hit 96m t last week, a new high for 2011. Source:steelbb.com