The Chinese Long Product Price Index CLPPI dipped by 2 point whereas the Chinese Flat Products Index CFPPI continued improving by posting gain of whooping 89 points. The overall price index CHISPI increased by mare 50 points.
Chinese steel price begins to rebound in October, and it is estimated that the seasonal adjustment will appear very soon due to following reasons.
1. High inventories
In general, the fact of high inventories is not changed. According to the data, the yield of crude steel over ten moths touched 470 million tonnes and the total volume of steel products were 565 million tonnes in 2008. In other words, China just needs to produce 70 million tonnes in the last two months in 2009 to surpass last year’s levels, which is likely to happen as the profit is still more than 10% and Chinese steel mills will not cut the production.
2. Negotiation of long term iron ore contract prices
This negotiation is the focus of the end of this year, which may be brought forward. As a rule, traders would increase the spot iron price and ocean freight. Therefore, the import price of iron ore and ocean freight rose since September. On the other hand, the weakened demand in winter will deter the increase of iron price.
3. Continued imbalance between supply and demand
The investment in fixed assets and real estate was less than expectation in October. Although the increase of investment increased by 33.2% in the first ten months, it reduced by 13.2% monthly, which is the largest reduction over the ten years. It is said that the investment has entered into a stable development, which may be hard to promote the steel price.
Overall, it is a period of seasonal bottom, and market players may wait to mid of January 2010 looking forward to a real increase of Chinese steel price due the Spring Festival and the busy season in spring.
1. Long products – Snow storms
The price movement Chinese long product market in last in last 6 days, ie since last high on November 11th 2009, signals ominous clouds on the horizon although this reversal is being attributed to slowdown in construction activity due to heavy snow fall in some parts of China.
Chinese construction steel price started to rebound in October. The trend of increase did not last for long as both the demand of spot steel impacted by the bad weather and the adjustment of rebars price caused the reduction of the price. However, market players believe that the rebars price will rise because of the increasing cost and recovering market.
2. Flats products – Pretentious revival
Chinese price trend setter Baoshan Iron and Steel Co Ltd signaled positives by announcing December price increase of 2.5% for HR and 6.4% for CR. Wuhan Steel raised its EXW price by CNY 300 per tonne. Rizhao Steel, Anyang Steel, Laiwu Steel, Jinan Steel, Taizhou Steel and Panzhihua Steel also lifted up their EXW price.
3. Export levels – Audacious revival
On the strength of rise in domestic levels, Chinese mills tried to increase the export levels a bit. It is learnt that the current export prices are at USD 490 per tonne FOB basis as compared to lowest heard levels of USD 480 per tonne. Kindly note that these offers are for HRC in 3 mm to 12mm in 1250/1500mm width in SS400 Grade And thinner sizes & grades have substantial extras pushing the CFR prices up.