It is reported that because of high costs and large inventories, Chinese steel EXW prices have been higher than Chinese domestic market prices.
According to data provided by Lange Steel Information Center, there were fifteen varieties of steel products whose EXW prices were higher than domestic market prices last week.
From the aspect of EXW prices, Analysts from Lu Zheng Futures said that current Chinese domestic steel prices were still dominated by large steel mills. And with supports of cost and positive demands expectation, major steel mills maintained prices stability or even hiked prices, so the EXW prices are rising.
Mr Peng Yansong from Dong Si Section Steel Co Ltd, while worrying about low turnover rate, said “I am in lack of confidence of the current steel market.”
However as to Chinese domestic market prices, inventories grew rapidly during the period of Chinese New Year especially that of construction steel. This is a major constraining factor in rising steel market prices.
It is reported that most customers can hardly accept the hiking prices in North Market so turnover of steel is not good. Besides since Chinese domestic demand for construction steel has not been fully released yet, turnovers in East and South Market are also not satisfying. Under high cost and high inventories, traders in market mostly hold a wait and see attitude and do not make too much adjustment in prices.
Zhang Lin, analyst form Lange Iron and Steel, said “if the demand continues to decline steel mills may face a difficult situation”.