Chinese steel prices, after decreasing till May 1st 2010, regained their upward path since than making simultaneously influence of rising steel prices on the downstream industry apparent.
According to statistics, the up trend continues. On May 4th, billet price in Tangshan rose by CNY 120 per tonne and rebar price in Beijing and Tianjin also rose by CNY 50 per tonne to CNY 100 per tonne. Besides, HR price rose slightly in Tianjin and Shanghai.
A trader told that this is a restorative rebound after two weeks adjustment in Chinese domestic steel prices. Although the central bank announced on May 2nd that financial institutions will raise the deposit reserve ratio by 0.5% from May 10th, because of absence of strong positive supporting factors, steel market prices are less likely to rise significantly rise continually.
Analyst from Western New Route said with the completeness of price adjustment and reduction of inventories, steel prices may regain their upward path in late May. He said because there are apparent profit margins in current inventories, mainly purchased before Chinese New Year, steel prices rise still lacks of momentum but prices will go up when steel of higher cost appears into steel market.
In addition, rising steel prices constituted greater pressure on downstream enterprises. Statistics from the recent Canton Fair show that most foreign clients have accepted the price rise and on site sale prices of electrical products rose by 5% to 10% in general, some even by 30%.