Since July 19th the domestic steel prices in China unshackled by a quantum leap of 4%. This significant development has caught everybody unawares. Chinese market which was yet reeling under the impact of rebate removal could at best have expected arresting downfall.
However the rally in the past few days has exasperated everybody.
As usual, autopsy, rather than prediction rules is quintessential in unpredictable times.
Analyst hurriedly imputed it to possible bottoming out with mill prices below cost. However it is amazing that such wisdom did not dawn upon them till last week when all experts where crying hoarse about a never ending slide in Chinese market.
Chinese living up to its reputation of a chameleon appreciated handsomely during the week giving reprieve to mill owners. It had an all encompassing impact with rally in raw material prices.
Flat product rally more mysterious than long product owing to the following reasons.
The rebate removal was for flat products only hence long product prices remained unaffected.
Post monsoon August September being peak season for construction flurry was always on the anvil.
Whereas the flat product prices rally seems purely speculative and absolutely devoid of any rationale in the present milieu. It is noteworthy that the major consumption sectors viz, automobile and electrical appliances have shown MoM decline in numbers since May.
Precisely for this reason a small dip in price on July 22nd in HRC raised eye brows indicating fragility of the growth.