Chinese steel prices are expected to stabilise as
demand softens in the near term and a round of government inspections aims to
stop speculation and irregularities, the China Iron and Steel Association
(CISA) said on Monday.
Prices in the world’s top steel producing country
surged in April and have fluctuated this month, driven by robust domestic
demand, rising raw material costs and a global easing of liquidity, according
to the CISA.
China’s steel price index jumped 9.25% to 148.88 by
the end of April compared with a month earlier, data compiled by the steel body
showed.
CISA said it expected demand to weaken over the
coming period as construction activities slow during the rainy season while the
autos and home appliances sectors are also entering their off-peak season.
Production levels at steel mills remain high, and
growing unwillingness by downstream users such as the shipbuilding industry to
keep paying the high prices seen since April is also expected to put downward
pressure on prices.
PRODUCTION LEVELS AT STEEL
MILLS REMAIN HIGH, AND GROWING UNWILLINGNESS BY DOWNSTREAM USERS SUCH AS THE
SHIPBUILDING INDUSTRY TO KEEP PAYING THE HIGH PRICES SEEN SINCE APRIL IS ALSO
EXPECTED TO PUT DOWNWARD PRESSURE ON PRICES
“From the domestic situation, the supply and demand
sides of steel products did not show overall or trending changes, steel prices
do not have the basis for sustained and substantial increases,” CISA said on
its official WeChat account.
It also cited a planned government crackdown on
market irregularities as a factor in the expected stabilisation of prices.
China’s market regulators warned industrial metal
companies to maintain “normal market order” during talks on Sunday, with the
main economic planning body saying that firms “should not collude with each
other to manipulate market prices … hoard goods and drive up prices”.
China’s steel rebar and hot rolled coils futures on
the Shanghai Futures Exchange closed down 3.6% and 3.9% respectively on Monday
after the announcement from the economic planner.
Benchmark iron ore futures plunged 5.2% at 1,064 yuan
($165.48) a tonne at close.
($1 = 6.4297 Chinese yuan renminbi)
(By Min Zhang and Shivani Singh; Editing by Estelle
Shirbon)
mining.com