According Mr Xu Huanghui GM of Shanghai Yebao Materials Co Ltd, prices for section steel are predicted to move down before 2010 Spring Festival on bad market demand.
Taking a study at the year-end section market, it was placed on an upward correction situation from October last year till now and Magang, Rizhao Steel and Baotou Steel made section steel eyed price growth of CNY 300 per tonne in spot market boosted by steel mills price hikes. By now, the steel mill has lifted ex works prices of CNY 400 per tonne at least which are much higher than the averaged spot prices.
Due to the thin market demand, the terminal users all hold wait and see attitudes toward the future market. So, why the section prices are undoubtedly to drop post Spring Festival?
Mr Xu held that it was determined by the market supply & demand relations. And some mills don’t have any reduction-plans by now, still on full-loaded production, sending the output constantly to pick up. As per statistics, the national output of large sized section steel was posted at 866,300 tonnes in December 2009 up by 99.70%YoY and that of medium and small sized up by 64% to 3.68 million tonnes during the same period.
He said that the market prices may fall back if steel mills lower their ex-works prices in later period. And news revealed from mills that they considered lowering their ex factory prices in moderation which would cause the market prices to go down with corrections.
In sum, the section steel market is bound to move down with corrections before Spring Festival, but with limited sliding spaces on high-priced raw materials.