As the effect of rising production cost has overdrawn the possible price rise after the Spring Festival, will the expectation of price rise be able to save the after festival steel market in China?
Before the festival, weak demand has already become reality in China’s steel market, and it can be reasonably asserted that the before-festival is solely supported by the optimistic market expectation. Therefore, China’s steel market will have to face the low demand reality directly after the festival.
Supply and demand balance is hard to strike
2011 is the opening year of the 12th Five Year Plan, and China’s central government will strengthen the elimination of backward production capacity. However, it will be a long process and needs great efforts from the government, so China’s crude steel production after the Spring Festival will still maintain a high level.
As to demand, exports situation will be far from being satisfactory, thus oversupply will be the most possible situation in China’s steel market after the festival.
According to previous tradition, after festival steel market will certainly enjoy a huge price rise. However, because steel prices before the festival have already been quite high, whether China’s steel market will be able to boom after the festival is still depending on the after-festival demand and macro economic condition.
(Source: www.steelguru.com )