Baoshan May Cut Hot-Rolled Steel Prices, Mysteel Says

By Bloomberg News

Sept. 7 (Bloomberg) -- Baoshan Iron & Steel Co., China’s biggest steelmaker, may cut benchmark hot-rolled coil prices for the first time in four months, following reductions by rivals, Mysteel Research Institute said.

The Shanghai-based mill will probably cut October prices for hot-rolled coil, used to make other steel products, by 4.3 percent to 4,442 yuan ($650) a metric ton, Mysteel said. Prices of cold-rolled steel, used to make cars, may be unchanged at 5,476 yuan a ton, the industry publication said.

Chinese steel prices have fallen 15 percent in the past four weeks after an earlier gain spurred record output in July. Prices will rebound from the recent declines because of increasing demand from the makers of automobiles, appliances and machinery, Baoshan President Ma Guoqiang said Aug. 31.

“Baoshan’s October policy indicates orders from automobile and appliance makers are stronger than machinery, shipbuilding and container producers,” said Hu Yanping, Beijing-based analyst with researcher Umetal Research Institute. “Baoshan remains optimistic over the market outlook because the price cut is smaller than the spot reductions.”

Baoshan Steel gained as much as 3.1 percent to 7.25 yuan in Shanghai, and traded at 7.17 yuan at 11:30 a.m. The benchmark Shanghai Composite Index gained 1.6 percent.

Vice President Chen Ying declined today to comment on the price report. The steelmaker may officially announce the October prices to traders and consumers late today or tomorrow, Mysteel analyst Bai Rui said.

Baoshan Steel may cut some steel products, such as pickling hot-rolled coil, by as much as 500 yuan a ton, Mysteel said. The mill may also keep prices of zinc-galvanized steel sheets unchanged.

Inventories in China, the world’s biggest steel producer, are at “high levels” and are weighing on prices, Citigroup Inc. said Sept. 4. Producers are anticipating “strong demand” in the fourth quarter, it said.

--Helen Yuan. Editors: Tan Hwee Ann, Matthew Oakley.

To contact the reporters on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net