According to Mr Lu Zhangfu GM of Zhejiang Fuchang Steel & Materials Co, having viewed continued soft operation of the steel market after the dragon boat festival, the trading houses are widely looking bearish its future movement. If the steelmakers do not intensify efforts to reduce the production, construction steel market will keep the vibrations without any improvement to be seen.
Mr Lu said after the festival, rebar and wire rod prices appeared comparatively stable in Hangzhou with II-grade 16mm to 25mm rebar standing at CNY 3830 per tonne around while the same gauge made by Shagang quoted at CNY 3930 per tonne. The sales volume was limited due mainly to insufficient demand and high stock.
He said when asked about the stocks in Hangzhou, it was still at some 670,000t, unchanged from before the festival, since the downstream demand has yet to see prominent expansion and production cuts are not forcefully made.
Some market prices remain lagging behind the ex-mill prices, just the gap has somewhat narrowed as compared with in the previous period. The producers offered some compensation for the trading houses, but the latter are still making loss.
Mr Lu said the price is unlikely to tumble in this case.
The price movement in July hinges on how effectively the steelmakers will cut the productions. If they are not determined to reduce the output or only limited cut is made, the construction steel market price will hold on fluctuations. On the contrary, if the stockpiled can be scaled down by making fewer yields by the mills, the market is hopeful to turn better in middle or later July.