Flat on the Surface, Discounted in Practice

　　On November 21, Shagang, China's largest privately owned steel mill, announced its ex-factory price policy for late November, keeping ex-factory prices of rebar, wire rod, and coiled rebar unchanged. On the same day, the latest ex-factory prices of Zenith Steel, Yonggang, and Hebei Iron and Steel Group also appeared as "flat." A day earlier (November 20), Ansteel announced its ex-factory price policy for major products in December, keeping ex-factory prices of hot-rolled coil, medium plate, color-coated sheet, and hot-rolled pickled products unchanged.

　　Baosteel, known as the "wind vane" of steel prices, also kept ex-factory prices of its major products unchanged for December. This is the third consecutive month that Baosteel has issued flat prices. It is worth noting that on top of the flat prices, Baosteel also offers discounts on some products; for certain varieties, the earlier the contract is signed, the greater the discount. Wuhan Iron and Steel, another major domestic flat steel producer, announced outright cuts in its new price policy, reducing prices of hot-rolled, medium plate, and cold-rolled products by 50 yuan/ton each.

　　Hu Yanping of China United Steel Network said that the December flat steel policies of leading steel mills were generally stable with slight cuts, mainly because the market failed to sustain the rebound seen at the beginning of the month and instead showed a weak adjustment trend.

　　An analyst at China Steel Spot Network said that the steel mills' final round of price adjustments for the year was stable with a weak bias, demonstrating a market trade-off to support prices. Since steel prices fell overall in October and November, if this round of price adjustments had been completely market-driven, it might have caused market prices to slide further. Steel mills balanced orders and price stability, sending a signal of smooth transition to the market. However, if steel mills do not cut production, the later trend may exceed expectations.

　　No Room to Fall Further

　　According to the latest statistics from the China Iron and Steel Association, in early November, key enterprises produced 1.7627 million tons of crude steel per day, an increase of 59,400 tons, up 3.49% from the previous ten-day period; the national estimated daily crude steel output was 2.1442 million tons, an increase of 45,800 tons, up 2.18% from the previous ten-day period. The data also showed that at the end of early November, the inventory of key statistical steel enterprises was 12.926 million tons, an increase of 49,600 tons from the previous period.

　　Last week, the domestic composite steel price index fell again by 0.25%. Rebar futures fluctuated, and the spot steel market was mainly weak and consolidating, with traders in a wait-and-see mood. Flat steel prices generally fell, with medium plate prices weak; prices in Shanghai and Hangzhou were stable, but weekly declines in Guangzhou and Tianjin were still between 10 and 50 yuan per ton. Construction steel prices also consolidated weakly, showing a pattern of low first and high later, with weekly declines of 10 to 40 yuan per ton in Shanghai and Guangzhou.

　　The analyst said that the main problem at present is that downstream demand is "lukewarm," traders are cautious, and market transactions are poor. As temperatures continue to drop across the country, the construction steel market will remain weak.

　　Regarding the later trend of steel prices, Hu Yanping said that steel prices are currently at a relatively low level and cannot fall further. Affected by dual pressures from environmental protection and operations, steel mill production will be affected and output will decline, thereby easing supply pressure. Demand will remain relatively stable during the same period, and combined with market expectations for next spring, steel prices will show a fluctuating upward pattern for some time in the future.

　　An analyst at China Steel Spot Network said that in the short term, the situation of high steel production capacity will still be difficult to ease. Steel prices have fallen again while steel output has risen, and mainstream steel mills' price adjustments are stable to downward. Moreover, as the year-end approaches, market funds tend to be tight, downstream purchasing enthusiasm is not high, and steel traders are holding less inventory. In the short term, steel prices will continue to fluctuate.