BEIJING (Asian Metal) 7 Mar 07 - More smelters resumed production early this week after the Spring Festival holidays or plan to restart soon. According to market sources, many smelters are quoting higher prices after returning to the market. However, few concluded deals have been heard of as not only sellers but also buyers prefer to watch the market for a while.
A Guangxi-based trader reported that many smelters begun to quote RMB41,000-41,500/t (USD5,297-5,362/t) ex works when they came back from the Lunar New Year holidays early this week, but no deals have been reportedly closed at the increased price so far this week.
“Smelters usually raise offers when they come back from a long holiday just as what they did in the past years. They might succeed in driving the price up as the market supply decreases due to the closure of many smelters during the holiday period,” said the source.
With some materials on hand which were purchased before the Spring Festival, the source has no plan to replenish stocks in the short term. Meanwhile, the source reported that they will probably raise the export offer in line with the increasing quotations by smelters, though the export market is still quiet at the moment.
A Guangdong-based trader confirmed that Chinese smelters intend to sell at higher prices after the Spring Festival. “Export business is hard to conduct as the purchasing cost is really high. When smelter offer RMB41,000/t ex works or higher prices, we cannot make any profit unless we export at a price above USD5,500/t FOB,” said the source. “However, foreign buyers are even reluctant to accept the offer of USD5,400/t CIF Rotterdam for now.”
Market supply will be a little tighter as many smelters halted production for two weeks or more for holidays. Therefore, the source thinks the price might rise slightly in the following week. However, the source holds that there will be limited room for the price to rise as demand is not increasing significantly.
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