As market participants return to business gradually, steel market is also turning busy. Baosteel, the country largest integrated steel mill increased its list prices for March while news about government to further hike the bank reserve ratio also is circulating. What indeed the market trend will be is now the hot topic within insiders. Some analysts believe very likely that the steel market will turn to increase as base on the following factors:
1. The market liquidity would continue to be sufficient. Though the new credit in February would drop slightly due to both the higher bank reserve ratio and the 7 days holiday, March will come soon and credit is likely to increase, given March usually is the month that banks release lots of credit. Meanwhile, the government also is unlikely to increase the interest rate in the short term as insiders believe.
2. China steel market barometer Baosteel hiked evidently its March list prices, which in turn greatly strengthened the support to the steel prices. Baosteel's prices increase also greatly enhanced the market sentiments, it is anticipated that other medium-and-small sized mills will soon follow suit.
3. It is almost certain that the prices of steelmaking materials will increase this year particularly that of iron ore prices. News has been circulating that five major China metallurgic companies have signed deals with big three iron ore giants to increase the iron ore prices from last year's USD 62 per tonne to USD 84 per tonne an increase of 40%.
4. The temperature will soon start to rise in March and construction projects as well as the downstream users will then return to operations, which in turn will demand increasing steel products.