Baosteel Corp: China Supply Glut Is Bad, as US HRC Futures Price Rises

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China’s largest steelmaker Baosteel Corp indicated recently that China’s steel production is higher than state figures show – meaning that even more steel supply is on the market.

According to Reuters, Baosteel “estimated national crude steel output in 2013 at 822 million tonnes, nearly 6 percent above official data.” Despite the government’s efforts to reduce bloated supply, pollution and other side effects of overproduction, the market remains saturated.

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Baosteel Corp’s chairman predicted that Chinese steel mills would continue to suffer in the second half of 2014, what with environmental compliance, high taxes and other challenges posed by the government.

Today’s Steel and Raw Material Prices:

Chinese steel prices closed flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.06) and a low price of CNY 830.00 ($134.44) per dry metric ton. The price of Chinese HRC saw essentially no change for the fifth day in a row, remaining around CNY 3,380 ($547.49) per metric ton. The price of Chinese coking coal was unchanged at CNY 1,390 ($225.15) per metric ton.

Also on the LME, the steel billet cash price remained essentially flat at $420.00 per metric ton. For the fifth day in a row, the 3-month price of steel billet remained essentially flat on the LME at $425.00 per metric ton.

The US HRC futures contract 3-month price nudged up 0.8 percent last Friday, closing at $646.00 per short ton. The US HRC futures contract spot price saw little price change last Friday at $665.00 per short ton.

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