It is reported that the recovery spreaded everywhere in domestic steel markets, as steel prices went up for straight weeks, mills turned into profits in May after 7 months and future market of construction steel again run into the upward channel.
The prices showed slight falls in the past week and the group of mills and traders, thinking about bearish market in future, became bigger, and the reckless release of outputs weighted on the digestion of end users. Some analysts noted industrial participators should be prudent on the recovery.
The halted price up in last week gave an alarm to the industry. The weakness after price rises obviously reflected the slowly released demands, which implied there’re still distances from the real recovery. In short, market analysts were impressed by that steel prices were still rising, and traders would like to support the trend; however, demands would fail to back up the trend, result in unavoidable falls in prices.
Mysteel’s price collection in last week showed construction steel prices generally fell down slightly with prices for wire rods in Shanghai and rebar in Tianjin and Wuhan both recorded some CNY 100 per tonne declines; medium plate prices basically kept stable with price changes fluctuated within CNY 50 per tonne, HR/CR sheet/coil remained stable, despite CR products in Tianjin down CNY 200 per tonne; prices for large and medium section steels edged up.
Steel prices are expected to find future direction in the coming corrections. Construction steel will soon face price adjustments, since demands will go week on hot weather, frequent raining, and high prices; medium plate and HR/CR sheet and coil will maintain the level. As expected, future medium plate prices will be promoted by the increased ex-work prices, however the expected rise will be short-lived and limited in range.
The research of Mysteel showed that over half of domestic mills and traders thought prices for rebar and HR products will appear downward adjustments. Despite the worrisome prices, China’s steelmakers firstly reversed losses into profits in May, but they poured plenty more products into the market at the same time, embittering market sales.
Mr Jia Liangqun chief analyst of Mysteel noted the swelling of outputs was mainly stimulated by the warm up in economy. Besides, that mills urgently released their capacities might attribute to the loose industrial structure and social motives to ensure development and employments.
The statistics showed key steelmakers realized profits of CNY 1.26 billion in May. The prices rise aroused the release of outputs, so that China daily output of crude steel reached 1.5 million tonnes in May and 1.55 million tonnes in the first twenty days in June a new record.
A market source predicted that if the daily outputs would average 1.52m tons in the following month, the crude steel production would post at 139 million tonnes both in Q3 and Q4 respectively up by 9.5%YoY and 27.7%YoY.
Mills and traders should be cautious about the recovery and try to stabilize the market at first, experts suggested. It remains uncertain if the recovery will last through the Q3.