China's Baosteel has announced that it will keep prices of major steel products unchanged in the first quarter of 2007 versus 4Q06. Hot rolled coil prices will remain at Rmb3,742/t ($476/t) and cold rolled steel prices will remain at Rmb4,596/t ($585/t). Taiwan's China Steel Corp. also announced on Thursday that it would keep prices flat for most steel products in the first quarter, having increased prices by roughly 4% in the fourth quarter.
Following low iron ore imports in October, the spot iron ore market continued to climb last week. The price for Hebei 66% iron ore fines increased to $89/t including VAT, an increase of 1.5% on the week and 4.5% on the previous month; while 63.5% Indian iron ore in Tianjin port (floor prices) have increased by 0.8% MoM to $82/t, including VAT.
Copper demand growth slowing in Chinese household appliance sector – a presentation by the China Household Electrical Appliance Association (CHEAA), at Macquarie's China Commodities Conference a week ago, highlighted the growing threat of substitution to aluminium (in air conditioners), and also the saturation of the air conditioner market in China.
October trade and production data released last week shows a slowing trend in YoY demand growth for the some commodities, although the absolute levels of demand growth on the whole remain exceptionally strong. The exceptions are copper, stainless steel and nickel where destocking had reduced apparent demand earlier in the year but now appear to be showing some recovery.
Domestic production growth numbers for China show double-digit growth in all commodities in 2006, with the single exception of reported nickel production. Even in nickel, the growth is much stronger when an allowance is made for the apparent surge in production of nickel "pig iron" from imported nickel oxide ore (mainly from the Philippines).
Our analysis of aggregate Chinese steel industry data indicates that while gross profit margins have continued to deteriorate this year, the data for the first three quarters does suggest that there have been some performance improvements. While the revenue per tonne has dropped from the previous year's levels —1.8% lower YoY, the steel sector has been able to reduce its cost of goods sold per tonne by 1% YoY for the first time since 2002 – a notable improvement given increased iron ore costs.
豫公网安备41010502003434号