It is reported that Chinese construction grade steel prices have kept rebounding since mid-July. Taking rebar as a benchmark, the spot price surged to CNY 4030 per tonne now from CNY 3650 per tonne.
It is really precious to witness such a price rise in the off season. However, insiders believe the price is likely to fall back after a further surge in the short term, citing the fading output cut.
Those insiders noted that, some mid and small mills based in Hebei province used to slash their output by over 30% in mid July when they met a great loss. Large plants there also decreased their output through overhaul.
As a result, steel price rebounded dramatically. However, small steelmakers started to recover their output after the price rebound leading to a capacity utilization of 85% and large mills’ overhaul will be over soon.
Chinese steel supply will enlarge after mid August. On the other hand, steel demand from construction programs will become weak in August. There are also many other uncertainties such as US dollars index and bulk commodities prices weighing on the market in the future.