As 2010 will be soon gone, domestic steel traders didn''t gain greasy profits on the continuously fluctuating steel market. And now, the raw materials market are also on the swell, like iron ore, coking coal, scrap, oil prices etc pushing the steel mills'' output costs to be further spiraled up.
Most market analysts believed that the market would maintain the recent correction trend in the coming 2011, so how should traders do when confronted this fluctuating trend has become a hot topic of debate in recent times.
Here are some uncertain elements which may still influence the future market as below:
1. The terminal demand still remained sluggish. It''s the slack season for the steel market on the cold weather. Besides many construction sites have gradually suspend works in North China areas.
2. The social inventory was hovering at a high level which needed a course of de-stockings to curb the price rebounds. Although some mills ceased production due to national power cut policy, flats steel inventory was still very high with that of HRC and CRC hitting at 10.94 million tonnes and 4.43 million tonnes respectively in October while the rebar and wired rod declined by 3.4%YoY and 0.5%YoY.
3. The increasing raw materials prices enabled the steel market to remain stable by the turn of the year. As learnt, the iron ore price is possibly to hike in 2011, and Baosteel was announced to keep Dec ex-mills polices unchanged.
4. China steel export situation is still far from being satisfactory in later periods. As per the customs statistics, China net export volume of crude steel accumulated at 24.3 million tonnes in total during January to October 2010 and in October alone, China has totally imported and exported steel products of 1.14 million tonnes and 2.86 million tonnes.
5. Macroeconomic policies cannot be ignored. On November 19, the people bank of China declared to lift the deposit reserve requirement ratio for financial institutions by 0.5% point again from November 29th as the nation stepped up efforts to combat inflationary pressures. The move will drain about CNY 350 billion from the financial system.
So, the steel traders have together worked out several measures to cope with the future market
1. They have to explore new sales channels, not mainly depended on the steel mills.
2. Traders should cut their orders from the mills and learn how to reduce the market crisis.
3. They have to develop new steel specs for larger profits.
4. To search new business channels to gain profits.
To sum up, the steel market is possibly to continue the fluctuation trend in the days to come and traders should take cool-headed attitude towards the market participation for better profits.