It is widely believed that demand in China’s steel market will fall back in 2011.
However, steel production capacity is still kept at a high level. Also, iron ore price will rise sharply in a short term, thus China’s steel enterprises will maintain the low profitable production style in the future.
Because demands for steel products are weak in both domestic market and international market, it’s expected that the booming demand before the year 2008 will never reappear in 2011.
Steel demand in China’s steel market is pegged at 614 million tonnes in 2010 and 657 million tonnes in 2011, with the corresponding rising level of 9% and 7% respectively.
Although demand for steel products will soon decline in 2011, the production capacity is still quite large. Therefore, overcapacity in steel production will be the reality also in 2011 China’s steel market.
Generally, it’s expected that the 2011 China’s steel market will operate around the average industrial cost and the average price level will be higher than that of 2010.
More specifically, another price rise may be possible soon after the Spring Festival is over, as pushed by the habitual price rise after inventory and the sufficient capital supply after the festival.
(Source: www.steelguru.com )