Chinese steel futures have been falling for one week consecutively. On August 24, steel stocks market went up sharply but steel futures remain low and close at low prices. So is the one week falling of steel futures a sign of the end of the current rebound which has lasted for more than one month?
In recent days, there is not enough good news to stimulate China’s steel market, and the public inventory of steel products is still rising, both of which can depress steel price much. Therefore it is quite possible that steel futures may fall within a limited range for the near future.
Steel futures close at low price
After the rebar main contract 1101 fell to the record low of 4042 points, China steel market has begun to rebound. Until now, the rebound has lasted for one whole month. However, steel futures` trend began to change last week, as it has closed at low price ever since then. It seems that the rebound may slowly come to an end.
Different trends for steel stocks and steel futures
On August 24, index of steel stocks has ended up by 2.43%, leading all other stocks market. Oppositely, steel futures have closed down rather up. Analyzed by expert, it is because stocks and futures have different focuses, as steel stocks are dependent on industry profit and steel futures on price difference.
The surge in steel stocks market is unable to drive steel futures up because there is not enough momentum pushing the current rebound further. So the future of China’s steel market is really hard to tell.
High inventory will bring steel price down
Under the pressure from high inventory, steel futures market may possibly go down. Meanwhile, as pointed out by industry insiders, the reproduction of many steel enterprises in August will further increase steel inventory and shock market confidence about steel futures.